In a step acquisition, which of the following statements is false?
A) The acquisition method views a step acquisition essentially the same as a single step acquisition.
B) Income from subsidiary is computed by applying a partial year for a new purchase acquired during the year.
C) Income from subsidiary is computed for the entire year for a new purchase acquired during the year.
D) Obtaining control through a step acquisition is a significant remeasurement event.
E) Preacquisition earnings are not included in the consolidated income statement.

Question

Quizplus · Accepted Answer

Income from subsidiary is computed for the entire year for a new purchase acquired during the year. This statement is true, not false. The other statements are all true as well - the acquisition method views a step acquisition essentially the same as a single step acquisition, income from subsidiary for a new purchase acquired during the year is computed by applying a partial year, obtaining control through a step acquisition is a significant remeasurement event, and preacquisition earnings are not included in the consolidated income statement.

In a Step Acquisition, Which of the Following Statements Is