When measuring the fair value of the acquired company as the price paid by the acquirer, the price calculation needs to consider the following EXCEPT for:
A)the estimated value of contingent consideration like assets or stock at a later date if specified events occur like targeted sales or income performance
B)the costs of accomplishing the acquisition, such as accounting and legal fees
C)common agreements like targeted sales or income performance by the acquire company are acceptable for valuation
D)issue costs from the stock of the acquirer may be expensed or they can be deducted from the value assigned to paid-in capital in excess of par only

Question

When measuring the fair value of the acquired company as the price paid by the acquirer, the price calculation needs to consider the following EXCEPT for:​
A)​the estimated value of contingent consideration like assets or stock at a later date if specified events occur like targeted sales or income performance
B)​the costs of accomplishing the acquisition, such as accounting and legal fees
C)​common agreements like targeted sales or income performance by the acquire company are acceptable for valuation
D)​issue costs from the stock of the acquirer may be expensed or they can be deducted from the value assigned to paid-in capital in excess of par only

Quizplus · Accepted Answer

The costs of accomplishing the acquisition, such as accounting and legal fees, are not considered in the fair value measurement of the acquired company. These costs are expensed as incurred and do not affect the purchase price or the valuation of the acquired company.

When Measuring the Fair Value of the Acquired Company as the Price