Assuming that A acquired a controlling interest in B through numerous small acquisitions, what would be appropriate accounting with respect to these acquisitions?
A) An acquisition differential must be computed following each purchase.
B) The equity method must be adopted retroactively once 20% ownership is obtained.
C) The purchases should all be grouped together and treated as a single block purchase.
D) The cost method should be used until a controlling interest is acquired.

Question

Quizplus · Accepted Answer

When acquiring a controlling interest in a company through numerous small acquisitions, the purchases should all be grouped together and treated as a single block purchase. This is known as the "unit of account" concept in accounting. The reason for this is that it allows for a more accurate representation of the value of the controlling interest, as opposed to treating each small acquisition separately. Additionally, this approach simplifies accounting and reporting requirements. Therefore, option C is the appropriate accounting treatment.

Assuming That a Acquired a Controlling Interest in B Through