Fun with Florals Corporation Acquired All the Voting Common Stock

question 106

Multiple Choice

Fun with Florals Corporation acquired all the voting common stock shares of Crafts-to-Go Corporation under the acquisition method.Crafts-to-Go remains a separate corporation.Which of the following statements about the financial statements is true?

• A)The assets and liabilities of Crafts-to-Go Corporation would be not revalued and disclosed at fair value on the date of acquisition.
• B)Fun with Florals will use the equity method of accounting for this investment.
• C)Fun with Florals will prepare consolidated financial statements.
• D)Fun with Florals will use the fair value method of accounting for this investment.

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Definitions:

Gas Station

A commercial outlet that offers gasoline and motor oil for automobiles.

Economic Profit

Profits earned by a firm after accounting for both explicit costs and opportunity costs.

Cartel

A group of independent companies that collaborate to control prices and production in order to monopolize a market.

Oligopoly

A market structure dominated by a small number of large firms, offering similar or identical products, with significant barriers to entry for new competitors.