The Acquisition of an Entity or Division May Be Performed

question 47

Multiple Choice

The acquisition of an entity or division may be performed through which of the following forms of consideration?

• A)Cash but not stock.
• B)Stock with no other contingent performance.
• C)Contingent performance with no further adjustment after the initial agreement.
• D)Cash,stock and/or contingencies.

---

Definitions:

Discounted Note

A promissory note, or loan agreement, where the interest is deducted from the principal amount at the time the loan is issued.

Interest

The cost of borrowing money or the earnings from lending money, calculated as a percentage of the principal amount.

Adjustment Interest

Adjustment Interest involves the modification of interest income or expense to correct or update the recorded interest in financial records.

Interest Expense

The cost incurred by an entity for borrowed funds, represented as an expense in the income statement.