U.S.GAAP and IFRS require firms to account for business combinations using the _____ method.

Question

Quizplus · Accepted Answer

Both U.S.GAAP and IFRS require firms to account for business combinations using the purchase method. This involves recognizing and measuring the fair value of assets and liabilities acquired in the transaction, and any goodwill resulting from the combination. The pooling-of-interests and uniting-of-interests methods were used in the past but are no longer allowed under current accounting standards. The equity method is used for investments in associates or joint ventures, and the cost method is used for investments in some securities.

USGAAP and IFRS Require Firms to Account for Business Combinations