Which of the following statements regarding step acquisitions is FALSE?
A)An acquirer can obtain its controlling interest in the acquiree by acquiring further shares and thereby adding to its previously held equity interest.
B)There may be a number of step purchases of shares in the acquiree prior to the obtaining of control.
C)The acquirer will recognize an investment in the acquiree with each step acquisition being measured at book value.
D)In a business combination achieved in stages, the acquirer shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in profit or loss.

Question

Quizplus · Accepted Answer

Step acquisitions are acquisitions in which an acquirer obtains its controlling interest in an acquiree by purchasing additional shares over time. In each step acquisition, the acquirer recognizes an investment in the acquiree at book value. However, in case of business combination achieved in stages, the acquirer shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in profit or loss. Hence, statement C is false as it does not apply in such a scenario.

Which of the Following Statements Regarding Step Acquisitions Is FALSE