Which of the Following Is Not True of Purchase Accounting

question 85

Multiple Choice

Which of the following is not true of purchase accounting?

• A) Total purchase price paid for the target firm is reflected on the books of the combined companies
• B) All liabilities are transferred at the NPV of their future cash payments
• C) The cost of the acquired entity becomes the new basis for recording the acquirer's investment in the assets of the target company.
• D) Goodwill equals the difference between the purchase price paid for the target firm and the book value of acquired assets.
• E) Goodwill must be reduced if it is believed to be impaired.

---

Definitions:

Employee Networks

Groups or communities within an organization where employees can connect, share information, and support each other professionally and personally.

Webinars

Online seminars or presentations that enable interactive participation and communication between presenters and audience over the internet.

Broadcasts

The transmission of programs or information by radio or television to a wide audience.

Horizontal Communication

Sending messages among people at the same organization level