In an asset acquisition:a.A consolidation must be prepared whenever financial statements are issued.b.The acquiring company deals only with existing shareholders, not the company itself.c.The assets and liabilities are recorded by the acquiring company at their book values.d.Statements for the single combined entity are produced automatically and no consolidation process is needed.

Answered: : a. A consolidation must be prepared…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In an asset acquisition:

a.	A consolidation must be prepared whenever financial statements are issued.
b.	The acquiring company deals only with existing shareholders, not the company itself.
c.	The assets and liabilities are recorded by the acquiring company at their book values.
d.	Statements for the single combined entity are produced automatically and no consolidation process is needed.

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An acquisition is the purchase of all or a portion of a corporate asset or target company instead of purchasing its stock in the market.

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