Under purchase accounting, the difference between the combined firm's shareholders' equity immediately following closing and the acquiring firm's shareholders' equity equals the purchase price paid for the target firm.

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Under purchase accounting, the acquiring firm records the target firm's assets and liabilities at their fair values on the acquisition date. The difference between the combined firm's shareholders' equity immediately following closing and the acquiring firm's shareholders' equity equals the purchase price paid for the target firm.

Under Purchase Accounting, the Difference Between the Combined Firm's Shareholders