Asked by Krystal Bandith on Apr 24, 2024
Verified
In the year ended June 30 20X7,Woof Ltd acquired the assets and assumed the liabilities of the Doggie Biscuits operation from Fido Ltd for $10 000 000.At the date of acquisition,the fair values of the net separable assets and liabilities of the operation were $8 000 000 and $1 000 000 respectively.Based on this information,the transaction has resulted in:
A) a business combination of Woof Ltd and Doggie Biscuits.
B) the acquisition of certain assets and liabilities, which is not a business combination since Doggie Biscuits is not a business but simply part of the Fido Ltd business.
C) the acquisition of certain assets and liabilities, which is not a business combination since Doggie Biscuits is not managed to provide a return to investors but only to provide a return to Fido Ltd.
D) none of the above.
Business Combination
The coming together of separate entities or businesses into one reporting entity via a merger, acquisition, or consolidation.
- Know the conditions under which a business combination occurs and the categorization of acquired assets or business operations.
Verified Answer
JM
Jolene MaciasMay 02, 2024
Final Answer :
A
Explanation :
A business combination occurs when one company acquires the assets and assumes the liabilities of another operation or business. In this case, Woof Ltd's acquisition of the Doggie Biscuits operation from Fido Ltd, including assets and liabilities, constitutes a business combination.
Learning Objectives
- Know the conditions under which a business combination occurs and the categorization of acquired assets or business operations.