Asked by Veronika Khvan on Jun 23, 2024
Verified
During the consolidation process, it may be necessary to make which of the following adjustments to the individual statements?
A) pre-acquisition entries only.
B) business combination valuation entries and pre-acquisition entries in the consolidation worksheet.
C) business combination valuation entries only.
D) business combination valuation entries and pre-acquisition entries in the individual journals of the parent and the subsidiaries.
Business Combination Valuation
The process of estimating the value of different companies coming together through acquisitions or mergers.
Pre-acquisition Entries
Pre-acquisition entries are journal entries made to account for the assets, liabilities, and any non-controlling interest of a company acquired in a business combination at the acquisition date.
- Grasp the principles and consequences of conducting valuation entries before the act of acquisition and amidst the business combination activities.
Verified Answer
AB
Anthony BrooksJun 30, 2024
Final Answer :
B
Explanation :
During the consolidation process, adjustments are made to combine the financial statements of the parent and the subsidiaries. These adjustments usually involve both pre-acquisition entries and business combination valuation entries. Therefore, the best choice is B, which includes both types of adjustments in the consolidation worksheet. The other options are not comprehensive enough to reflect the full consolidation process.
Learning Objectives
- Grasp the principles and consequences of conducting valuation entries before the act of acquisition and amidst the business combination activities.
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