Mega Corporation acquired 65% of the voting shares of Forko Ltd.Mega consolidated its accounts by restating assets and liabilities of the subsidiary at fair value on the date the shares were acquired.Which of the following methods for accounting for the business combination is being used by Mega Corporation?
A)Purchase method
B)Fair value method
C)Pooling method
D)Current replacement cost method

Question

Quizplus · Accepted Answer

The Purchase method, now known as the acquisition method under International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP), involves restating the acquired company's assets and liabilities at fair value on the acquisition date. This is the method being described in the scenario with Mega Corporation.

Mega Corporation Acquired 65% of the Voting Shares of Forko