In the equity method of acquisition income is recognized only when the subsidiary declares dividends Select one: True False
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- In the cost method of acquisition income is recognized only when the subsidiary declares dividends Select one: True FalseWhen there is a dividend payable by the subsidiary at acquisition date, under what conditions should the existence of this dividend be taken into consideration in preparing the pre-acquisition entries?If the entity is using the equity method to account for investment in subsidiary, the entry to recognize dividends received from the subsidiary will: a.Be recognized in profit or loss b.Increase the carrying amount of investment c.Decrease the carrying amount of investment d.Be recognized in other comprehensive income
- Indirect costs related to acquisition of another entity is treated as An expense An investment account Share capital Share premiumStatement I: During the measurement period, the acquirer shall prospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of acquisition date.Statement II: Controlling interest is the equity in a subsidiary not attributable, directly or indirectly, to a parent. a. True, True b. False, False c. False, True d. True, False4. What method normally is used to account for the ownership of a subsidiary on the parent’s financial records? a Cost model/methodb. Equity methodc. Consolidationd. Either cost model/method or equity method
- In a business combination - stock acquisition, difference between current fair values and book values of subsidiary’s identifiable assets and liabilities on acquisition date is:True or False Pls indicate if the statements are True or False. 1. All allocated excess/purchase differentials are amortized. 2. Allocated excess/purchase differential amortizations are the allocation over time of the difference between the market value and the book value of the subsidiary’s assets and liabilities at the acquisition date. 3.In a stock acquisition that results to goodwill, the acquirer should classify it in its separate financial statements as a/an: a. Equity b. Asset c. Liability d. None of the above
- Statement I: Gain on bargain purchase is included in the consolidated balance of shareholders’ equity at the date of acquisition.Statement II: All business combination expenses, direct, indirect, and share-issue costs are deducted in the consolidated balance of shareholders’ equity at the date of acquisition. True, False False, False True, True False, TrueAcquisition accounting requires an acquirer and an acquirer to be identified for every business combination. Where a new entity (H) is created and two pre-existing entities, S and A, which of these entities will be designated as the acquirer? H S A S or ATRUE OR FALSE: Indicate whether the statements are true or false. 1. Assuming the parent acquired 100 percent of the subsidiary’s stock and there are no purchase differentials, the investment income recorded by the parent in the current period will equal the subsidiary’s current net income recognized subsequent to the acquisition date. 2.