Acquisition Method Accounting Treatment

Very Easy Intercorporate Investments Acquisition Method

ABC Corporation has recently acquired XYZ Ltd. Under the acquisition method of accounting, ABC Corporation will need to assess the fair value of identifiable assets acquired and liabilities assumed at the acquisition date. According to the acquisition method, which of the following statements is true regarding the accounting treatment for this business combination?

All identifiable assets and liabilities of the acquired entity are recognized at their carrying amounts.

Goodwill is recognized only if the fair value of the consideration transferred exceeds the fair value of net assets acquired.

The acquirer must recognize non-controlling interests at their carrying amounts.

Hint

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