A feature of the purchase method of accounting includes the assets of the target firm must be shown at their fair market value on the books of the bidder.

Question

Quizplus · Accepted Answer

In the purchase method of accounting, the assets and liabilities of the target firm are recorded at their fair market value on the acquiring company's balance sheet, reflecting the actual cost paid for those assets and liabilities.

A Feature of the Purchase Method of Accounting Includes the Assets