Reference no: EM132827967

Problem 1: How should acquisition related costs such as due diligence and legal costs be accounted for?

A. expensed as incurred
B. As part of the total consideration
C. As a reduction in equity
D. As a deferred asset

Problem 2: A bargain purchase arises when the price paid to acquire a controlling interest in another company is less than the acquirer's share of the fair value of net assets of the company being acquired. At the end of your preliminary analysis, you believe that a business combination results in a bargain purchase. What is your next step?

A. Recognize an immediate gain in the consolidated statement of profit and loss without further analysis.
B. Recognize a liability in the consolidated balance sheet.
C. Contact the acquiree to confirm its intention.
D. Reassess each step of your analysis to confirm your preliminary findings.