GA Wind Farm in Iowa Buys a Large Turbine Generator

question 93

Multiple Choice

GA wind farm in Iowa buys a large turbine generator from a Swedish-owned factory located in Connecticut that uses workers who live in Connecticut.As a result,

• A)U.S.investment,GDP,and GNP all increase by the same amount.
• B)U.S.investment increases,but GDP and GNP are unaffected by the purchase.
• C)U.S.investment and GDP increase by the same amount,but U.S.GNP increases by a smaller amount.
• D)U.S.investment and GNP increase by the same amount,but U.S.GDP increases by a smaller amount.

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Definitions:

Consolidated Financial Statements

Financial reports that display the economic condition, operational outcomes, and cash movements of a parent company and its subsidiary companies as one consolidated entity.

Pooling-of-interests Method

A merger accounting method where the assets and liabilities of merging companies are combined using their book values.

Acquisition Method

An accounting approach used to consolidate the financial statements of two companies when one company acquires control over the other.

Purchase Method

An accounting method used in mergers and acquisitions where the assets and liabilities of the acquired company are added to the acquirer's balance sheet at their fair market values.