A business combination is accounted for properly as an acquisition. Which of the following expenses related to effecting the business combination should enter into the determination of net income of the combined corporation for the period in which the expenses are incurred?
A) Security issue cost, yes; overhead allocated merger, yes
B) Security issue cost, yes; overhead allocated merger, no
C) Security issue cost, no; overhead allocated merger, yes
D) Security issue cost, no; overhead allocated merger, no

Question

Quizplus · Accepted Answer

Security issue costs are not expensed but rather deducted from the proceeds of the securities issued. Overhead allocated to the merger is expensed in the period incurred.

A Business Combination Is Accounted for Properly as an Acquisition