The pre-acquisition entry is necessary to:
A) avoid overstating the equity and net assets of the parent.
B) record the 'shares in subsidiary' account in the parents records.
C) avoid overstating the equity and net assets of the group.
D) avoid understating the equity and net assets of the group.

Question

Quizplus · Accepted Answer

The pre-acquisition entry is necessary to avoid overstating the equity and net assets of the group by eliminating the investment in the subsidiary against the subsidiary's equity at the acquisition date.

The Pre-Acquisition Entry Is Necessary To