In the ____ method of accounting for mergers, the total value paid or exchanged for the acquired firm's assets is recorded on the acquiring company's books.
A) purchase
B) goodwill
C) pooling of interests
D) stockholders' equity

Question

Quizplus · Accepted Answer

The purchase method of accounting for mergers involves recording the total value paid or exchanged for the acquired firm's assets on the acquiring company's books. This method is the most common method used today by companies to account for mergers and acquisitions. The goodwill method involves recording the excess amount paid over the fair market value of the acquired firm's assets as goodwill on the acquiring company's books. The pooling of interests method, which was once commonly used, involves combining the two companies' financial statements as if they had always been one entity. Stockholders' equity is a section of the balance sheet that represents the owners' investment in the company.

In the ____ Method of Accounting for Mergers, the Total