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.

---

Definitions:

Sockeye Salmon

A species of salmon found in the Pacific Ocean, known for its red flesh and significant role in commercial fishing and ecological balance.

Forestry Companies

Businesses involved in the cultivation, maintenance, and harvesting of forests for commercial, recreational, or conservation purposes.

Growth Pattern

The specific way in which an economic entity or biological organism grows over time, often analyzed to predict future developments.

Deforestation

The clearing or removal of forests or trees from land which is then converted to non-forest use.