How Should Accounting Fees for an Acquisition Be Treated

question 32

Multiple Choice

How should accounting fees for an acquisition be treated?

• A)Expensed in the period of acquisition
• B)Capitalized as part of the acquisition cost
• C)Deferred and amortized
• D)Deferred until the company is disposed of or wound-up

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Definitions:

Time-Sales Finance

Financing arrangements that allow consumers to purchase goods or services over time, typically involving installment payments.

Installment Contract

A legal agreement requiring regular payments over time for the purchase of goods or services, typically used for expensive items.

Conditional Sales Contracts

Agreements where the sale is contingent upon certain conditions, often used in transactions involving goods or property.

Purchased Equipment

Machinery or tools acquired by a business for use in its operations, representing capital expenditure and an enhancement of operational capacities.