An acquiring corporation must use the acquisition method for financial statement purposes whether the business combination is a taxable purchase or a nontaxable reorganization.

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Quizplus · Accepted Answer

This statement is true. The acquisition method is a required accounting method for all business combinations, regardless of whether they are taxable purchases or non-taxable reorganizations. This method requires the acquiring corporation to recognize and measure all of the assets acquired and liabilities assumed at fair value on the acquisition date, and to record any resulting goodwill. This provides more useful and reliable financial information for investors and other users of financial statements.

An Acquiring Corporation Must Use the Acquisition Method for Financial