Accounting for a business combination must be accounted for using the purchase method.

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According to International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP), business combinations must be accounted for using the purchase method. Under this method, the acquiring company records the assets and liabilities of the target company at their fair value on the acquisition date, and any excess amount paid is recorded as goodwill.

Accounting for a Business Combination Must Be Accounted for Using