Business CombinationsMCQQuestion 5757 of 6
All Questions

Which of the following is a condition for applying the acquisition method of accounting for business combinations?

Options

AThe acquirer must have control over the acquiree
BThe acquiree must be a listed company
CThe business combination must be financed through debt
DThe acquisition must be completed within a year
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Correct Answer

✅ Option A — The acquirer must have control over the acquiree

All Options:

  • AThe acquirer must have control over the acquiree ✓
  • BThe acquiree must be a listed company
  • CThe business combination must be financed through debt
  • DThe acquisition must be completed within a year

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Detailed Solution & Explanation

Control is a critical concept in the acquisition method, as it determines whether the acquirer has the ability to direct the financial and operating policies of the acquiree. The acquirer must have the power to make decisions that affect the acquiree's operations and financial position.
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More Questions from Business Combinations

What is the primary method of accounting for business combinations?

What is the accounting treatment for goodwill arising from a business combination?

Explain the concept of control in the context of business combinations and its significance in determining the accounting treatment.

Discuss the provisions of Ind AS 103 relating to the accounting treatment for business combinations.

Analyze the impact of business combinations on the financial statements of the acquirer and the acquiree.

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