question archive The consolidation treatment of profits on inventory transfers that occurred before the business combination depends on whether: the companies were independent at that time
The consolidation treatment of profits on inventory transfers that occurred before the business combination depends on whether: the companies were independent at that time
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The consolidation treatment of profits on inventory transfers that occurred before the business combination depends on whether:
-
- the companies were independent at that time.
- the sale transaction was the result of arm's-length bargaining.
- I
- II
- Both I and II
- Neither I nor II
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Answer:
C .
explanation
When there is a consolidation post-merger between two companies, then the companies would value their assets and liabilities depending on the fair value or market value prevailing in the market. Accordingly, the valuation process is carried out.
