How Should the Acquisition Cost of a Business Combination Be

question 60

Multiple Choice

How should the acquisition cost of a Business Combination be allocated prior to preparing Consolidated Financial Statements?

• A)The difference between the Purchase Price and the Fair Values of the acquirer's identifiable assets should be treated as goodwill.
• B)The acquisition cost should be allocated to the acquirer's interest in the fair values of the acquired company's identifiable assets and liabilities.
• C)The acquisition cost should be reflected as an increase in the acquirer's Investment (in the subsidiary)account.
• D)The treatment of the acquisition cost depends largely on the type of consideration given by the acquirer.

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