The Purchase Accounting Method for Mergers Requires That

question 78

Multiple Choice

The purchase accounting method for mergers requires 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 acquired 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.

---

Definitions:

Infected Person

An individual who has been invaded by pathogenic organisms such as bacteria, viruses, or fungi, leading to disease or illness.

Fungus

A kingdom of eukaryotic organisms that includes yeasts, molds, and mushrooms, which are distinct from plants, animals, and bacteria.

Helminth

Parasitic worms, including flukes, tapeworms, and roundworms, that can cause disease in humans.

Protozoan

A diverse group of single-celled eukaryotic organisms, many of which are parasitic.