Which of the following statements is correct?
A)Since 2002,the only acceptable method of accounting for Business Combinations is the Pooling of Interests Method)
B)Since 2002,the only acceptable method of accounting for Business Combinations is the Purchase Method)
C)In the future,all Business Combinations shall be accounted for using the New Entity Method only.
D)The Purchase Method can only be used when Cash is the sole consideration offered by the acquirer in a Business Combination.

Question

Quizplus · Accepted Answer

Since 2002, the only acceptable method of accounting for Business Combinations is the Purchase Method. The Pooling of Interests Method was eliminated as an option for accounting for Business Combinations after 2001. The New Entity Method is not the only acceptable method for accounting for Business Combinations; it is only an optional method. The Purchase Method can be used in a variety of situations, not just when cash is the sole consideration offered.

Which of the Following Statements Is Correct