The purchase accounting method for mergers require that:.
A. The excess of the purchase price over the fair market value of the target firm be recorded as a one-time expense on the income statement of the acquiring firm.
B. Goodwill be amortized on a yearly basis.
C. The equity of the acquiring firm be reduced by the excess of the purchase price over the fair market value of the target firm.
D. The assets of the target firm be recorded at their fair market value on the balance sheet of the acquiring firm.
Answer:D
The purchase accounting method for mergers require that:.
A. The excess of the purchase price over the fair market value of the target firm be recorded as a one-time expense on the income statement of the acquiring firm. B. Goodwill be amortized on a yearly basis. C. The equity of the acquiring firm be reduced by the excess of the purchase price over the fair market value of the target firm. D. The assets of the target firm be recorded at their fair market value on the balance sheet of the acquiring firm.