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Identify the statement about reverse acquisition consolidated FS that is INCORRECT.
AGoodwill is computed based on consideration effectively transferred by the legal acquirer (= legal acquirer's pre-merger market value)
BComparative numbers shown are those of the accounting acquirer (legal subsidiary)
CAssets and liabilities of the accounting acquiree (legal acquirer) are recognised at FV
DEquity structure presented is that of the legal parent (legal acquirer)
Answer & Solution
Correct answer: A. Goodwill is computed based on consideration effectively transferred by the legal acquirer (= legal acquirer's pre-merger market value)
Goodwill in reverse acquisition is computed using consideration effectively transferred by the ACCOUNTING ACQUIRER (legal acquiree) — typically via the notional-issuance approach or the legal acquirer's quoted price for the equity given to it. The other three statements correctly describe reverse-acquisition presentation.
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