How are direct and indirect costs accounted for when applying the acquisition method for a business combination?
A)Option A.
B)Option B.
C)Option C.
D)Option D.
E)Option E.

Question

How are direct and indirect costs accounted for when applying the acquisition method for a business combination? 
A)Option A. 
B)Option B. 
C)Option C. 
D)Option D. 
E)Option E.

Quizplus · Accepted Answer

Under the acquisition method for a business combination, both direct costs (such as legal and advisory fees) and indirect costs (such as those related to integration and restructuring) are included as part of the total cost of the acquisition. This total cost is then allocated to the assets acquired and liabilities assumed based on their fair values at the acquisition date. The remainder of the cost is recognized as goodwill. Therefore, Option A is the best choice as it correctly explains that both direct and indirect costs are included in the total cost of the acquisition.

How Are Direct and Indirect Costs Accounted for When Applying