At the date of an acquisition which is not a bargain purchase, the acquisition method

A) Consolidates the subsidiary’s assets at fair value and the liabilities at book value.

B) Consolidates all subsidiary assets and liabilities at book value.

C) Consolidates all subsidiary assets and liabilities at fair value.

D) Consolidates current assets and liabilities at book value, and long-term assets and liabilities at fair value.

E) Consolidates the subsidiary’s assets at book value and the liabilities at fair value.

Answer: C   

Learning Objective: 02-04 

Learning Objective: 02-05

Topic: Acquisition―Valuation principles

Topic: Acquisition―Allocate fair value

Difficulty: 1 Easy

Blooms: Remember

AACSB: Reflective Thinking

AICPA: BB Critical Thinking

AICPA: FN Measurement