Which of the following statements is true regarding the acquisition method of accounting for a business combination?
A) Net assets of the acquired company are reported at their fair values.
B) Net assets of the acquired company are reported at their book values.
C) Any goodwill associated with the acquisition is reported as a development cost.
D) The acquisition can only be effected by a mutual exchange of voting common stock.
E) Indirect costs of the combination reduce additional paid-in capital.

Question

Quizplus · Accepted Answer

Under the acquisition method, the net assets of the acquired company are reported at their fair values at the acquisition date.

Which of the Following Statements Is True Regarding the Acquisition