Haleakala Inc. purchased 80% of the stock of Kobuk Inc. Following the acquisition both companies remain in existence as separate legal entities. Which of the following statement is true?

a. This type of business combination is a statutory merger through asset acquisition

b. This type of business combination is a statutory merger through stock acquisition

c. Consolidating entries are done only once at the time of acquisition

d. Consolidating entries are prepared each time financial statements are prepared

e. Since both companies remain as separate legal entities consolidated financial statements are not prepared

Kineret Inc. purchased 100% of the stock of Bental Inc. Following the acquisition Kineret remain in existence and Bental dissolved and ceased to exist. Which of the following statement is true?

a. This type of business combination is a statutory merger through asset acquisition

b. This type of business combination is a statutory merger through stock acquisition

c. This type of business combination is a statutory consolidation through stock acquisition

d. Consolidating entries are prepared each time financial statements are prepared

e. This acquisition should be recorded under the purchase method