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CFA Level 2
Financial Reporting and Analysis

Acquisition Method Accounting Treatment

Very Easy Intercorporate Investments Acquisition Method

Company A is evaluating the acquisition of Company B. According to the acquisition method of accounting, when Company A acquires Company B, it must recognize the fair value of Company B's identifiable assets and liabilities at the acquisition date. This approach aims to reflect the economic realities of the transaction. Given this context, which of the following statements correctly describes the accounting treatment for the acquisition?

Hint

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