The Fair Value of Assets and Liabilities of the Acquired

question 26

Multiple Choice

The fair value of assets and liabilities of the acquired entity is to be reflected in the financial statements of the combined entity. When the acquisition takes place over a period of time rather than all at once, at what time is the fair value of the assets and liabilities of the acquired entity determined under SFAS 141R?

• A) the date the interest in the acquiree was acquired.
• B) the date the acquirer obtains control of the acquiree
• C) the date of acquisition of the largest portion of the interest in the acquiree.
• D) the date of the financial statements.

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Definitions:

Coupon Rate

The interest rate stated on a bond or other fixed-income security, represented as a percentage of the principal amount.

Restrictive Covenants

Clauses in a contract that limit certain actions of the parties involved, often used in employment agreements and loan documents to protect business interests.

Call Provision

A feature in certain debt instruments that allows the issuer to repay the debt before its maturity date, usually at a specified call price.

Sinking Fund

A fund established by an organization to set aside revenue over a period for the future repayment of debt.