An acquirer pays cash for the assets and liabilities of another company. Which of the following is most likely to be reported by the acquirer as one of the liabilities acquired from the other company?

Question

Quizplus · Accepted Answer

Warranty liability not previously reported by the acquiree is a liability that the acquirer would report as part of the liabilities acquired. This is because it represents an obligation that arises from the past business activities of the acquiree, which the acquirer assumes upon acquisition.

An Acquirer Pays Cash for the Assets and Liabilities of Another