The Purchase Accounting Method Requires That

Multiple Choice

The purchase accounting method requires that:

A) the excess of the purchase price over the fair market value of the target firm be recorded as a one-time expense on the income statement of the acquiring firm.
B) goodwill be amortized on a yearly basis for financial statement purposes.
C) the equity of the acquiring firm be reduced by the excess of the purchase price over the fair market value of the target firm.
D) the assets of the target firm be recorded at their fair market value on the balance sheet of the acquiring firm.
E) the excess amount paid for the target firm be recorded as a tangible asset on the books of the acquiring firm.