The consolidation process will involve replacing the investment account that is recorded in the books of the acquirer with the ____________ acquired from the acquiree.
A)goodwill
B)specific net assets
C)negative goodwill
D)retained earnings.

Question

Quizplus · Accepted Answer

The consolidation process involves replacing the investment account with the specific net assets acquired from the acquiree. This means that the individual assets and liabilities of the acquiree will be recorded at their fair values in the books of the acquirer, instead of the original investment account. Goodwill and negative goodwill are calculated based on the difference between the purchase price and the fair value of the acquiree's net assets, and are recorded separately in the books. Retained earnings are a component of the acquired net assets, which are included in the consolidation process by replacing the investment account with the specific net assets.

The Consolidation Process Will Involve Replacing the Investment Account That