Which of the following events can cause a change in the pre-acquisition entry subsequent to acquisition date?

A) I, II, III and IV.
B) I, III and IV only.
C) II and III only.
D) III and IV only.

Question

Which of the following events can cause a change in the pre-acquisition entry subsequent to acquisition date?

A) I, II, III and IV. 
B) I, III and IV only. 
C) II and III only. 
D) III and IV only.

Quizplus · Accepted Answer

Only factors affecting the acquired company after the acquisition date can cause a change in the pre-acquisition entry subsequent to acquisition date. This includes:
- adjusting the fair value of assets and liabilities of the acquired company due to newly discovered information
- revising estimates of contingent liabilities based on new information
Therefore, options I and II (changes in management's intentions or changes in exchange rates) are not relevant to the pre-acquisition entry subsequent to acquisition date, while option III (changes in fair value of assets and liabilities) and option IV (revisions to contingent liabilities) are relevant.

Which of the Following Events Can Cause a Change in the Pre-Acquisition