One common criticism of the Purchase Method is that:
A) Fair market values can never be accurately assessed.
B) The Consolidated Balance Sheet contains both Book Values and Fair Market Values.
C) The Fair Values of a Subsidiary's assets cannot be adjusted to reflect changes in valuation.
D) The use of the term "Purchase" can mislead users of the Consolidated Financial Statements, since it implies that cash has been exchanged.

Question

Quizplus · Accepted Answer

The Purchase Method results in a Consolidated Balance Sheet that includes both the Book Values of the parent company and the Fair Market Values of the acquired subsidiary's assets and liabilities, which can create inconsistencies.

One Common Criticism of the Purchase Method Is That