The purchase of another company or division must be recorded on which basis?
A)pooling basis.
B)purchase basis.
C)push down basis.
D)merger basis.

Question

Quizplus · Accepted Answer

The purchase of another company or division must be recorded on the purchase basis. This involves recording the assets and liabilities of the acquired entity at their fair market value on the acquisition date, along with any goodwill or gain recognized from the transaction. The pooling of interests method is no longer allowed under generally accepted accounting principles (GAAP) and the push down basis is used for financial reporting purposes by the acquired company, not the acquirer. The merger basis is not a recognized accounting method.

The Purchase of Another Company or Division Must Be Recorded