Which of the following accounting treatments for costs related to business combination is incorrect? The costs related to issuance of financial liability at fair value through profit or loss shall recognized as expense while those related to issuance of financial liability at amortized cost shall be recognized as deduction from the book value of financial liability or treated as discount on financial liability to be amortized using effective interest method. Acquisition related costs such as finder's fees, advisory, legal, accounting evaluation on and other professional O and consulting fees, and general administrative costs, including the costs of maintain an internal acquisitions department shall be recognized as expense in the Profit/Loss in the periods in which the costs are incurred. The costs related to issuance of stocks or equity securities shall be deducted/debited from any share premium O from the issue and any excess is charged to "share issuance cost" reported as contract-equity account against either (1) share premium from other share issuance or (2) retained earnings. The costs related to the organization of the newly formed corporation also known as pre-incorporation costs shall be capitalized as goodwill or deduction from gain on bargain purchase.
Which of the following accounting treatments for costs related to business combination is incorrect? The costs related to issuance of financial liability at fair value through profit or loss shall recognized as expense while those related to issuance of financial liability at amortized cost shall be recognized as deduction from the book value of financial liability or treated as discount on financial liability to be amortized using effective interest method. Acquisition related costs such as finder's fees, advisory, legal, accounting evaluation on and other professional O and consulting fees, and general administrative costs, including the costs of maintain an internal acquisitions department shall be recognized as expense in the Profit/Loss in the periods in which the costs are incurred. The costs related to issuance of stocks or equity securities shall be deducted/debited from any share premium O from the issue and any excess is charged to "share issuance cost" reported as contract-equity account against either (1) share premium from other share issuance or (2) retained earnings. The costs related to the organization of the newly formed corporation also known as pre-incorporation costs shall be capitalized as goodwill or deduction from gain on bargain purchase.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity
Section: Chapter Questions
Problem 1RE
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Transcribed Image Text:Which of the following accounting treatments for costs related to business combination is
incorrect?
The costs related to issuance of financial liability at fair value through profit or loss shall recognized as expense
while those related to issuance of financial liability at amortized cost shall be recognized as deduction from the
book value of financial liability or treated as discount on financial liability to be amortized using effective interest
method.
Acquisition related costs such as finder's fees, advisory, legal, accounting evaluation on and other professional
O and consulting fees, and general administrative costs, including the costs of maintain an internal acquisitions
department shall be recognized as expense in the Profit/Loss in the periods in which the costs are incurred.
The costs related to issuance of stocks or equity securities shall be deducted/debited from any share premium
from the issue and any excess is charged to "share issuance cost" reported as contract-equity account against
either (1) share premium from other share issuance or (2) retained earnings.
The costs related to the organization of the newly formed corporation also known as pre-incorporation costs
shall be capitalized as goodwill or deduction from gain on bargain purchase.
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