Question

In a business combination when each combining firm remains a legally incorporated separate entity:____.
a. the acquiring firm does not physically record the acquired firm's separate assets and liabilities.
b. the parent records on its accounting records each of the acquired assets and liabilities assumed in the business combination.
c. the parent company employs consolidated worksheet entries to help prepare a set of consolidated financial statements.
d. the parent records an investment account at the subsidiary's net book value of the assets acquired and liabilities assumed.

Answer 1

Answer:

a). the acquiring firm does not physically record the acquired firm's separate assets and liabilities.

c). the parent company employs consolidated worksheet entries to help prepare a set of consolidated financial statements.

Explanation:

Business Combination is characterized as an agreement through which the owner gains authority over a business or acquires it primarily to expand his/her business empire. When each combining firm persists a legally incorporated autonomous identity, 'the acquiring firm does not physically record the acquired firm's separate assets and liabilities and the parent company enrolls combined worksheet entries to assist prepare a group of combined financial statements.' It assists in making the acquisition easier and legally apt. Hence, options a and c are the correct answers.