In a business combination:
A) it is not necessary to identify the acquirer as long as parent entity has been identified;
B) the parent entity will always be the acquirer;
C) the accounting acquirer is the entity that becomes the controlling entity;
D) the legal acquirer is the entity that becomes the controlling entity.

Question

Quizplus · Accepted Answer

In a business combination, the accounting acquirer is the entity that becomes the controlling entity, regardless of whether it is the legal acquirer or not. Therefore, it is necessary to identify the acquirer in order to properly account for the combination. Option A is incorrect because it is always necessary to identify the acquirer. Option B is incorrect as the parent entity may not always be the acquirer. Option D is also incorrect as the legal acquirer may not always be the accounting acquirer.

In a Business Combination