A company acquires the assets and liabilities of another company. The acquired company's assets and liabilities are reported on the acquiring company's books at fair value as of what date?

Question

Quizplus · Accepted Answer

The assets and liabilities of the acquired company are reported on the acquiring company's books at fair value as of the day the acquiring company takes control of the acquired company. This is because the control date marks the point at which the acquiring company has the ability to direct the relevant activities of the acquired company, making it the appropriate time to measure and recognize the fair values of acquired assets and liabilities.

A Company Acquires the Assets and Liabilities of Another Company