A business combination involves the joining together of assets and liabilities under the control of a specific entity. Therefore, the business combination occurs at the date:
A)the net assets are under the control of the acquirer.
B)the contract is signed.
C)the consideration is paid.
D)nominated in the contract.

Question

Quizplus · Accepted Answer

A business combination occurs when assets and liabilities come under the control of a specific entity, which is the acquirer. Therefore, the most appropriate date for business combination is the date when the net assets are under the control of the acquirer. This is because, at this point, the acquirer has the power to govern the financial and operating policies of the acquired entity. The other options such as the contract signing or payment of consideration may happen before or after the business combination.

A Business Combination Involves the Joining Together of Assets and Liabilities