Read the following case and answer the following questions as an accountant for the partnership:

Lulu Company (Merchandising company) decided to purchase 100% of Raya company (Real estate company) at the beginning of 2019, both companies are agreed on creating a new company called LR company for real estate and general trading furthermore they agreed on that using the FMV for any exchanging transactions.

Questions:

1. What is the Acquisition Method of Accounting used for the Business Combinations? (2.5 Points)

2. What is the method of the business combinations used? Why? (2.5 Points)

3. Which type of Business Combinations followed in the above case? Why? (2.5 Points)