Which of the following events can cause a change in the pre-acquisition entry subsequent to acquisition date? I. Depreciation on non-current assets.
II. Transfers to post-acquisition retained earnings.
III. Transfers from pre-acquisition retained earnings.
IV. Bonus dividends paid from pre-acquisition equity
A) III and IV only.
B) I, II, III and IV.
C) I, III and IV only.
D) II and III only.

Question

Quizplus · Accepted Answer

Events that can cause a change in the pre-acquisition entry subsequent to the acquisition date include transfers from pre-acquisition retained earnings and bonus dividends paid from pre-acquisition equity. These affect the calculation of goodwill or excess on acquisition because they change the equity of the acquired company as it stood at the acquisition date. Depreciation on non-current assets and transfers to post-acquisition retained earnings affect the post-acquisition financials and do not retroactively alter the pre-acquisition balances.

Which of the Following Events Can Cause a Change in the Pre-Acquisition