For a business combination, we measure all assets and liabilities of an acquired company at fair value. Fair value
A) Is an exit value.
B) Is an entry value.
C) Is an appraisal value.
D) Can be either an exit value or an entry value depending on the circumstances.

Question

Quizplus · Accepted Answer

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit value). Therefore, the fair value measurement for a business combination is also an exit value.

For a Business Combination, We Measure All Assets and Liabilities