Question

Which if the following statement is false regarding push-down accounting?

A) push-down accounting simplifies the consolidation process
B) fewer worksheet entries are necessary when push-down accounting is applied
C) push-down accounting provides better information for internal evaluation
D) push-down accounting must be applied for all business combination under pooling of interests
E) push-down accounting argue that a change in ownership creates a new basis for subsidiary assets and liabilities

Answer 1

The false statement regarding push-down accounting is that it must be applied for all business combinations under pooling of interests. Option d.

Step-by-step explanation:

Push-down accounting is a method used in business combinations, where the acquiring company's financial statements include the assets and liabilities of the acquired company at their fair values. The false statement regarding push-down accounting is D) push-down accounting must be applied for all business combinations under pooling of interests. Under the pooling of interests method, the acquiring company combines its assets and liabilities with those of the acquired company using the book values, rather than fair values. As a result, push-down accounting is not required under pooling of interests.

A) push-down accounting simplifies the consolidation process, B) fewer worksheet entries are necessary when push-down accounting is applied, and C) push-down accounting provides better information for internal evaluation are all true statements regarding push-down accounting. E) push-down accounting argues that a change in ownership creates a new basis for subsidiary assets and liabilities is also a true statement.