Which of the following statements regarding accounting in the records of the acquiree is FALSE?
A)Where the acquirer purchases the acquiree's assets and liabilities, the acquiree may continue in existence or it may liquidate.
B)If the acquiree subsequently decides to liquidate, it transfers the cash remaining to the shareholders as a liquidating dividend.
C)When the acquirer buys only shares in the acquiree from the shareholders of the acquiree, there are no entries in the records of the acquiree because the transaction is between the acquirer and the shareholders of the acquiree entity.
D)Where the acquirer purchases the acquiree's assets and liabilities, the acquiree must liquidate.

Question

Quizplus · Accepted Answer

This statement is false because the acquiree does not necessarily have to liquidate if the acquirer purchases its assets and liabilities. The acquiree may continue to operate as a subsidiary or become a dormant entity. Therefore, option D is incorrect.

Which of the Following Statements Regarding Accounting in the Records