Asked by Dominic Gomez on Jun 18, 2024
Verified
It is important to distinguish between pre-acquisition and post-acquisition equity of a subsidiary to allow:
A) post-acquisition equity to be eliminated on consolidation.
B) goodwill or gain on bargain purchase to be calculated.
C) avoidance of double counting of pre-acquisition equity.
D) none of the above.
Pre-acquisition Equity
The equity interest that an acquirer holds in an acquiree before the business combination, accounted for in the acquisition process.
Post-acquisition Equity
The portion of an acquired company's equity that accrues or changes after the date of acquisition by the parent company.
Consolidation
The process of combining the financial statements of separate companies into the consolidated financial statements of a single entity, typically a parent company and its subsidiaries.
- Identify the differences between pre-acquisition and post-acquisition equity and their relevance in the consolidation procedure.
Verified Answer
Learning Objectives
- Identify the differences between pre-acquisition and post-acquisition equity and their relevance in the consolidation procedure.
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