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The correct answer is (b) Combination of two or more entities that occurs when the entities transfer all their net assets to a new entity created for that purpose.
Consolidation refers to the process of combining the financial statements of two or more entities into one consolidated financial statement.
This is usually done when one company acquires another company or when two or more companies merge to form a new entity.
In consolidation, the net assets of the acquired or merged company are transferred to the new entity created for that purpose.
The consolidated financial statement shows the financial results and position of the new entity as if it had always existed.
ans: (b)