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A large manufacturing firm made two significant acquisitions around the close of 20x6 (assume a calendar fiscal year).

The first was to purchase all the outstanding voting stock of Pernod, Inc. in December 20x6. The second was to purchase 40% of the outstanding voting stock of Weynod, Inc. in January 20x7. The manufacturing firm's 20x6 financial statements were issued in February 20x7.

Choose the correct statement regarding the accounting for these acquisitions in the 20x6 financial statements of the manufacturing firm.
a. Pernod Weynod
b. consolidated described in the footnotes only
c. described in the footnotes only described in the footnotes only
d. consolidated apply equity method
e. apply equity method apply equity method

Respuesta :

Answer:

b. consolidated described in the footnotes only

Explanation:

Given information

1. Outstanding voting stock first purchase of Pernod, Inc. in December 20x6

2. Outstanding voting stock first purchase of Weynod, Inc in December 20x7

By considering this above information, the first purchase reflects the purchase before the balance sheet date while the second purchase reflects that this purchase is not shown at the balance sheet date.

So, these both transactions are shown in the footnotes only as a consolidated because it depicts the full disclosure of the transaction

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