Plaza Corporation acquires all of the assets and liabilities of Spiceland Company. How are Spiceland's research and development costs of ongoing projects reported on Plaza's books at the date of acquisition?

Question

Quizplus · Accepted Answer

Research and development costs of ongoing projects are reported as identifiable assets at fair value on Plaza's books at the date of acquisition. This is because, under acquisition accounting, identifiable assets and liabilities of the acquired company are recognized at their fair values at the acquisition date.

Plaza Corporation Acquires All of the Assets and Liabilities of Spiceland