There are many forms of business combinations that can occur. However, for which of the following are the requirements for accounting for a business combination NOT used?
A)A acquires the assets only of B, and B pays off the liabilities and then liquidates.
B)A acquires all the assets and only some of the liabilities of B, and B pays the remaining liabilities before liquidating.
C)The business combination results in the formation of a joint venture.
D)A acquires a group of net assets of B, the group of net assets constituting a business, such as a division, branch or segment, of B.

Question

Quizplus · Accepted Answer

The requirements for accounting for a business combination are not used in the formation of a joint venture. Joint ventures involve two or more parties creating a new entity by both contributing equity and sharing control, which is distinct from a business combination where one entity acquires control over another.

There Are Many Forms of Business Combinations That Can Occur