What is the total acquisition-date fair value of Involved?
A) $2,600,000
B) $4,812,500
C) $3,062,500
D) $2,312,500
E) $3,250,000

Question

Quizplus · Accepted Answer

The total acquisition-date fair value of Involved is calculated as follows:
- Cash paid: $2,500,000
- Common stock issued: ($15/share x 200,000 shares) = $3,000,000
- Contingent consideration: $312,500
Total acquisition-date fair value = $2,500,000 + $3,000,000 + $312,500 = $5,812,500
However, this amount includes the fair value of a liability assumed by the acquirer. To arrive at the net total acquisition-date fair value of Involved, we need to subtract the fair value of the assumed liability: $5,812,500 - $1,000,000 = $4,812,500. Therefore, the correct answer is option B.

What Is the Total Acquisition-Date Fair Value of Involved