{"id":47622,"date":"2024-04-15T22:29:26","date_gmt":"2024-04-15T22:29:26","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=47622"},"modified":"2024-04-15T22:29:26","modified_gmt":"2024-04-15T22:29:26","slug":"under-the-purchase-method-of-accounting-the-transferee-company-incorporates-in-its-books","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/under-the-purchase-method-of-accounting-the-transferee-company-incorporates-in-its-books\/","title":{"rendered":"Under the &#8216;purchase method of accounting&#8217;, the transferee company incorporates in its books"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;The assets, liabilities and reserves of the transferor company&#8221; option2=&#8221;The assets, liabilities and not statutory reserves of the transferor company&#8221; option3=&#8221;The assets, liabilities and statutory reserves of the transferor company&#8221; option4=&#8221;The assets and liabilities of the transferor company&#8221; correct=&#8221;option4&#8243;]<!--more--><\/p>\n<p>The correct answer is: <strong>D. The assets and liabilities of the transferor company<\/strong>.<\/p>\n<p>Under the purchase method of accounting, the transferee company incorporates in its books the assets and liabilities of the transferor company at their fair values on the date of acquisition. The purchase price is allocated to the assets and liabilities acquired based on their fair values. Any difference between the purchase price and the fair value of the net assets acquired is recorded as goodwill.<\/p>\n<p>Option A is incorrect because it includes reserves. Reserves are not assets or liabilities, but rather are adjustments to equity.<\/p>\n<p>Option B is incorrect because it excludes statutory reserves. Statutory reserves are a type of reserve that is required by law to be maintained by a company.<\/p>\n<p>Option C is incorrect because it includes both assets and liabilities, as well as reserves. Reserves are not assets or liabilities, but rather are adjustments to equity.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;The assets, liabilities and reserves of the transferor company&#8221; option2=&#8221;The assets, liabilities and not statutory reserves of the transferor company&#8221; option3=&#8221;The assets, liabilities and statutory reserves of the transferor company&#8221; option4=&#8221;The assets and liabilities of the transferor company&#8221; correct=&#8221;option4&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-47622","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Under the &#039;purchase method of accounting&#039;, the transferee company incorporates in its books<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/under-the-purchase-method-of-accounting-the-transferee-company-incorporates-in-its-books\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Under the &#039;purchase method of accounting&#039;, the transferee company incorporates in its books\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;The assets, liabilities and reserves of the transferor company&#8221; 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