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For Each of the Following Situations, Select the Best Letter

Question 74

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For each of the following situations, select the best letter answer to reflect the effect of the numbered item on the acquirer’s accounting entry at the date of combination when separate incorporation will be maintained. Item (4) requires two selections.

Premises:
Direct costs.
Indirect costs.
Stock issue costs.
Contingent consideration.
Bargain purchase.
Responses:
Increase Investment account
Decrease Investment account
Increase Liabilities
Increase Common stock.
Decrease common stock.
Increase Additional paid-in capital.
Decrease Additional paid-in capital.
Increase Retained earnings
Decrease Retained earnings

Correct Answer:

Increase Investment account
Decrease Investment account
Increase Liabilities
Increase Common stock.
Decrease common stock.
Increase Additional paid-in capital.
Decrease Additional paid-in capital.
Increase Retained earnings
Decrease Retained earnings
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