_____ In a business combination accounted for as a purchase, how are costs of registering equity securities issued by the acquiring company treated?
A) As an expense of the combined company for the period in which the costs were incurred.
B) As a direct addition to the stockholders' equity of the combined company.
C) As a direct charge to equity (Additional Paid-in Capital).
D) As an addition to goodwill.
E) None of the above.

Question

Quizplus · Accepted Answer

Costs of registering equity securities issued by the acquiring company in a business combination accounted for as a purchase are treated as a direct charge to equity, specifically to Additional Paid-in Capital. This approach reflects the costs as part of the transaction to acquire the other company, rather than as an expense of the period or an addition to goodwill.

_____ in a Business Combination Accounted for as a Purchase