Which of the following is considered to be part of the acquisition cost of a subsidiary?
A) Due diligence fees paid to lawyers.
B) The fair value of assets transferred by the acquirer.
C) The costs of issuing debt or shares.
D) Amounts paid to accountants for advice.

Question

Quizplus · Accepted Answer

The fair value of assets transferred by the acquirer is considered part of the acquisition cost of a subsidiary. Due diligence fees paid to lawyers and amounts paid to accountants for advice are considered transaction costs and not part of the acquisition cost. The costs of issuing debt or shares are financing costs and also not part of the acquisition cost.

Which of the Following Is Considered to Be Part of the Acquisition