1. A company acquires all of the assets and liabilities of another company. Which statement is false? A. The acquired company no longer exists as a separate entity. B. The acquiring company reports the acquired assets and liabilities at fair value at the date of acquisition. C. The acquiring company does not revalue its assets and liabilities to fair value at the date of acquisition. D. The acquiring company does not report acquired intangible assets unless they are already reported on the acquired company's books.

Question

Berry

Business

4 September, 08:24

1. A company acquires all of the assets and liabilities of another company. Which statement is false? A. The acquired company no longer exists as a separate entity. B. The acquiring company reports the acquired assets and liabilities at fair value at the date of acquisition. C. The acquiring company does not revalue its assets and liabilities to fair value at the date of acquisition. D. The acquiring company does not report acquired intangible assets unless they are already reported on the acquired company's books.

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Ronald Hatfield · Answer 1

The answer is D.

Explanation:

When a company is acquiring a company, it is buying all the assets and liabilities of the acquired company.

The acquiring company will report the intangible asset (Goodwill). It is a purchased goodwill. Goodwill is the difference between purchase price and the net asset of the acquiring company.

Acquiring company will no longer exist because the acquired is buying all of the acquiring company's share.

All the assets and liabilities will be valued and reported at fair value to show the current market price.

It is not necessary for acquiring company to revalue all its assets and liabilities.