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:

Future Expenses

Anticipated costs or financial obligations a company expects to incur in the future.

Note Payable

A written promise to pay a specific sum of money at a future date, typically including interest payments.

Promissory Note

A financial instrument in which one party (the issuer) promises in writing to pay a determinate sum of money to the other (the payee), either at a fixed or determinable future time or on demand of the payee, under specific terms.

Prepaid Expense

Payments made beforehand for products or services that will be provided later on.