Under the acquisition method for a business combination, the cost incurred to effect the business combination, such as finders and legal fees are
A) Considered part of the historical cost of the business.
B) Expensed as incurred.
C) Allocated, along with the purchase price of the acquired company's stock to the assets of the acquiree company.
D) Deferred until a full accounting of all costs to acquire the acquire company are known.

Question

Quizplus · Accepted Answer

Under the acquisition method for a business combination, the cost incurred to effect the business combination, such as finders and legal fees are expensed as incurred. This is in line with the principle of recognizing expenses when they are incurred and matching them with the period in which they are utilized to generate revenue.

Under the Acquisition Method for a Business Combination, the Cost