How are stock issuance costs accounted for in an acquisition business combination?

Stock Issuance Costs

Expenses associated with the issuance of new shares of stock, including underwriting, legal, and registration fees.

Acquisition

The process of obtaining control of another corporation or business entity through purchase or merger.

Business Combination

A process where two or more companies merge or one acquires another, resulting in consolidation of assets and liabilities.

Clarify the significance and method of accounting for direct, indirect, and share issuance expenditures in business consolidations.

Verified Answer

Final Answer :

Stock issuance costs reduce the balance in the acquirer's Additional Paid-In Capital in an acquisition business combination.

Learning Objectives

Clarify the significance and method of accounting for direct, indirect, and share issuance expenditures in business consolidations.