Which of the Following Most Accurately Describes the Position Taken

question 31

Multiple Choice

Which of the following most accurately describes the position taken by current generally accepted accounting principles?

• A) Both pooling of interests and the purchase method are still permitted under certain circumstances.
• B) The valuation basis to be applied is the acquisition method under which the fair value of consideration transferred includes any contingent consideration,but excludes direct combination costs..
• C) The valuation basis to be applied is the cost method under which the valuation basis is the fair value of the assets and liabilities acquired including direct combination costs,but excluding contingent consideration.
• D) The purchase method requires a business acquisition transaction to be structured to meet twelve very specific criteria required by generally accepted accounting principles.

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Definitions:

Endowment Effects

A behavioral economics concept where individuals value an object more highly simply because they own it, influencing their willingness to trade or sell.

Gain Experience

The process of acquiring knowledge, skills, and competencies as a result of direct participation in activities or tasks.

Permanent Condition

A state or situation that is not expected to change over time.

Fairness

The quality of making judgments that are free from discrimination or dishonesty.