Asked by Linda MyPhuong on Jun 07, 2024
Verified
The choice of the method of recording fair value adjustments in a business combination will be influenced by what factors?
Fair Value Adjustments
Modifications made to the reported value of assets or liabilities to reflect their actual market value.
Business Combination
This occurs when two or more businesses come together to form a single company, often through acquisitions or mergers.
Recording Method
A system or standard procedure for capturing financial transactions and events in an organization's accounting records.
- Assess factors influencing the choice of method for recording fair value adjustments in business combinations.
Verified Answer
LS
Lydia SchulzJun 08, 2024
Final Answer :
Choice of methods of recording fair value adjustments:
- Fair value adjustments can be made in the records of the subsidiary or as consolidation adjustments.
- If the group uses the revaluation model for property,plant and equipment and intangible assets,the fair value adjustments will be made in subsidiary accounts.If the cost model is used,the adjustments will be made on consolidation.
- Fair value adjustments can be made in the records of the subsidiary or as consolidation adjustments.
- If the group uses the revaluation model for property,plant and equipment and intangible assets,the fair value adjustments will be made in subsidiary accounts.If the cost model is used,the adjustments will be made on consolidation.
Learning Objectives
- Assess factors influencing the choice of method for recording fair value adjustments in business combinations.