A company acquires all of the voting stock of Previn Company, and records the transaction by debiting "Investment in Previn Company." The company is accounting for its investment as a:

Question

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When a company acquires all of the voting stock of another company and records the transaction by debiting "Investment in Previn Company," it is accounting for its investment as a stock acquisition. This indicates that the acquiring company has obtained control over the acquired company through the purchase of its stock.

A Company Acquires All of the Voting Stock of Previn