Which of the following statements is true regarding the acquisition method of accounting for a business combination?
A. The transaction may be considered to be the uniting of the ownership interests of the companies involved.
B. The transaction establishes an acquisition fair value basis for the company being acquired.
C. The two companies may be about the same size, and it is difficult to determine the acquired company and the acquiring company.
D. The acquired subsidiary must be smaller in size than the acquiring parent.
E. The combination must involve the exchange of equity securities only.
Answer: B
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