Acquisition Method Accounting Treatment

Easy Intercorporate Investments Acquisition Method

ABC Corporation is considering acquiring XYZ Inc. to expand its market reach. Under the acquisition method of accounting, ABC will evaluate the fair value of assets acquired and liabilities assumed at the acquisition date.

What is the primary accounting treatment that ABC Corporation should apply when recognizing the identifiable assets and liabilities of XYZ Inc. post-acquisition?

Identify and measure all identifiable assets acquired and liabilities assumed at their fair values at the acquisition date.

Recognize only the assets that are financed directly with cash and ignore all liabilities.

Record all assets acquired and liabilities assumed at their historical costs on the acquisition date.

Hint

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