What is an example of acquisition method?

What is an Example of Acquisition Method?

In a business combination, the acquisition method is used when one company (the acquirer) acquires control of another company (the target) by purchasing a majority of its shares. The acquirer records the target’s assets and liabilities at their fair values, and the difference between the purchase price and the target’s net assets is recorded as goodwill.

One example of the acquisition method is the acquisition of Company B by Company A. In this transaction, Company A acquired 100% of Company B’s shares for $50 million. The fair value of Company B’s assets and liabilities was also $50 million, so there was no goodwill recorded.

The acquisition method is the most common method of accounting for business combinations. It is used when the acquirer acquires control of the target, and it results in the target’s assets and liabilities being recorded at their fair values.