In a merger of companies P and S, S ceased to exist. Which of the following statements about date of merger financial statements is false?
a. P's financial statements will reflect S's former assets and liabilities at their book values on S's records at the date of acquisition.
b. P's financial statements will reflect S's former assets and liabilities at their fair values.
c. P's financial statements will reflect P's shareholders' equity. S's shareholders' equity will not be added in.
d. No "Investment in S" account will exist on the financial statement
a. P's financial statements will reflect S's former assets and liabilities at their book values on S's records at the date of acquisition.
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Indicate whether this statement is true or false.
Why would a company favor an entity plan over a cross-purchase plan?
A) Tax benefits B) An entity plan has fewer policies C) When they have a lot of so-called "key employees" D) When a buy-and-sell agreement is not feasible