When a business combination is formed by the creation of a parent-subsidiary relationship, the parent will always be identified as the acquirer.

Question

Quizplus · Accepted Answer

In a business combination resulting in a parent-subsidiary relationship, the parent is not always the acquirer; the determination of the acquirer is based on the guidance provided by accounting standards, which involves assessing factors such as relative voting rights, the composition of the governing body of the combined entity, and the terms of the exchange, among others.

When a Business Combination Is Formed by the Creation of a Parent-Subsidiary