Which of the following statements is correct?
A) Companies may choose between the New Entity Method and the Acquisition Method when accounting for business combinations.
B) The only acceptable method of accounting for business combinations is the New Entity Method.
C) The only acceptable method of accounting for business combinations is the Acquisition Method.
D)The New Entity Method can only be used when Cash is the sole consideration offered by the acquirer in a business combination.

Question

Quizplus · Accepted Answer

According to international financial reporting standards (IFRS), the only acceptable method of accounting for business combinations is the Acquisition Method. This method involves recognizing and measuring the assets and liabilities of the acquired company and incorporating them into the financial statements of the acquirer at fair value. The New Entity Method is not an acceptable option under IFRS.

Which of the Following Statements Is Correct