Asked by Jordan Novak on Jun 18, 2024
Verified
In allocating the cost of a business combination,what is not required to exist at the date of acquisition?
A) Assets
B) Liabilities
C) Goodwill
D) Contingent liabilities
Business Combination
An event in which multiple entities combine to form a single entity, typically to enhance competitive positioning and operational efficiency.
Acquisition
The process of obtaining ownership or control of another company or business entity.
- Understand the allocation of the cost of a business combination and the recognition of goodwill.
Verified Answer
SB
sonia bajwaJun 24, 2024
Final Answer :
C
Explanation :
Goodwill is not required to exist at the date of acquisition; it is recognized only if the purchase price of the acquired company exceeds the fair value of its net identifiable assets.
Learning Objectives
- Understand the allocation of the cost of a business combination and the recognition of goodwill.
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