Recognizing Identifiable Assets and Liabilities
Fair Value Measurement
The acquirer recognizes all identifiable assets acquired and liabilities assumed at their acquisition-date fair values, regardless of the acquiree's carrying amounts before the acquisition.
- Cash.
- Receivables.
- Inventory.
- Property, plant, and equipment.
- Intangible assets.
- Liabilities assumed.
Tip
Ignore the acquiree's historical book values when applying the acquisition method.
Summary
Assets and liabilities are recognized at fair value rather than historical cost.