Question 1

Discuss the reasons for the existence of reverse acquisitions.

Accepted Answer

The answer of Discuss the reasons for the existence of...

Question 2

Adjustments required in a reverse acquisition only affect the consolidated financial statements.

Accepted Answer

Adjustments made in a reverse acquisition affect the consolidated financial statements as they involve the combination of financial statements of the acquirer and the acquiree, resulting in a new reporting entity. These adjustments do not affect the financial statements of the individual entities before the combination.

Question 3

Describe the accounting effects of a reverse acquisition.

Accepted Answer

The answer of Describe the accounting effects of a reverse...

Question 4

Which accounts are affected when a dividend elimination entry occurs?

Accepted Answer

A dividend elimination entry affects dividend revenue and dividend declared, as it adjusts the accounts to eliminate the effects of intercompany dividends in consolidated financial statements.

Question 5

In accounting for a reverse acquisition,it is necessary to recognise the fair value of the net assets of:

Accepted Answer

In a reverse acquisition, the legal acquirer is the accounting acquiree, and the legal acquiree is the accounting acquirer. Therefore, the fair value of the net assets of the acquiree (legal acquirer) is recognized.

Question 6

Discuss the reasons why the fair value of a subsidiary's net assets may not be equal to their carrying amount.

Accepted Answer

The answer of Discuss the reasons why the fair value...

Quiz 3: Fair Value Adjustments and Tax Effects