Which of the following statements regarding the acquisition analysis is incorrect?
A) It determines whether there is goodwill on acquisition or a gain on bargain purchase.
B) It is considered the first step in the consolidation process.
C) It calculates and compares the fair value of the consideration transferred with the fair value of the net identifiable assets and liabilities acquired.
D) It calculates the fair value of the net identifiable assets and liabilities acquired based on the value of the post-acquisition equity in the subsidiary.

Question

Quizplus · Accepted Answer

The incorrect statement is that the acquisition analysis calculates the fair value of the net identifiable assets and liabilities acquired based on the value of the post-acquisition equity in the subsidiary. In fact, the fair value of the net identifiable assets and liabilities acquired is determined based on their fair values at the acquisition date, not the value of the post-acquisition equity.

Which of the Following Statements Regarding the Acquisition Analysis Is