The Purchase Accounting Method for Mergers Require That

question 39

Multiple Choice

The purchase accounting method for mergers require that:

• A)the excess of the purchase price over the fair market value of the target firm be recorded
• As a one-time expense on the income statement of the acquiring firm.
• B)goodwill be amortized on a yearly basis.
• C)the equity of the acquiring firm be reduced by the excess of the purchase price over the
• Fair market value of the target firm.
• D)the assets of the target firm be recorded at their fair market value on the balance sheet of
• The acquiring firm.
• E)the excess amount paid for the target firm be recorded as a tangible asset on the books of
• The acquiring firm.

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Definitions:

Expensive

Having a high price or cost, typically in relation to value or to the financial means of the buyer.

Cocaine

A powerful and illegal stimulant drug derived from the leaves of the coca plant.

Illegal Drugs

Substances whose production, sale, or possession is prohibited by law due to their potential effects on health and society.

Effect

The result or outcome of a cause, influencing factors or actions that lead to a change or consequence.