Which of the following statements are incorrect with regards to pre-acquisition entries prepared after acquisition date?
A) are adjusted for transfers between post-acquisition equity accounts.
B) are adjusted for the changes in the investment account recognised by the parent in the subsidiary.
C) include the pre-acquisition entry prepared at acquisition date adjusted for the effects of all the transfers between pre-acquisition equity accounts and changes in the investment account up to the beginning of the current period.
D) reverse the transfers between pre-acquisition equity accounts and changes in the investment account that happen in the current period.

Question

Quizplus · Accepted Answer

B  D  Pre-acquisition entries are not adjusted for transfers between post-acquisition equity accounts (A) or for changes in the investment account recognized by the parent in the subsidiary (B). They also do not reverse transfers and changes that happen in the current period (D).

Which of the Following Statements Are Incorrect with Regards to Pre-Acquisition