An accounting method that requires the assets of the target firm to be reported at their fair market value on the books of the bidder is called the _______ method.
A) Purchase accounting.
B) Purchase reserve.
C) Pooling of interests.
D) Accounting reserve.
E) Goodwill accounting reserve.

Question

Quizplus · Accepted Answer

The Purchase accounting method requires that the assets of the target firm be reported at their fair market value on the books of the bidder. This method contrasts with the pooling of interests method, which was used in the past but is no longer allowed under current accounting standards.

An Accounting Method That Requires the Assets of the Target