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In: Accounting

How are direct combination costs, contingent consideration, and a bargain purchase reflected in recording an acquisition...

How are direct combination costs, contingent consideration, and a bargain purchase reflected in recording an acquisition transaction?

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Expert Solution

In recording of an acquisition transaction, fair concept value is used.

So, direct combination costs are the expensed as incurred, as it is the cost which the company incurr. Contingent consideration is the obligations of acquiring entity to transfer the additional assets to acquiree. So, While recording in the acquisition transaction, contingent consideration are recorded as its present value. And in a bargain purchase, fair value of assets and liabilities are measured and as a result gain from bargain purchase is recognised at the acquisition date.

ekkarill92 answered 2 years ago
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