Sya Ltd. acquired all the assets and liabilities of Littman Ltd. by issuing common shares to Littman. After this transaction, Littman owned 30% of Sya's outstanding shares. How should Sya record Littman's assets and liabilities on its books?
A)At their original cost
B)At their net book value
C)At their fair market value
D)At their fair market value plus an allocated share of goodwill to each item

Question

Quizplus · Accepted Answer

When a company acquires another company's assets and liabilities, the acquired assets and liabilities are recorded at their fair market value on the acquirer's books at the acquisition date. This is in accordance with the acquisition method of accounting.

Sya Ltd Acquired All the Assets and Liabilities of Littman Ltd