[agripper]

A combination is accounted for as an acquisition (initiated in a fiscal year beginning after December 15, 2008). Which of the following would be considered part of the acquisition cost of an acquired entity in a business combination?

Costs incurred by the acquiring entity that are directly related to the acquisition

Costs incurred by the acquired entity that are directly related to the acquisition

Indirect acquisition costs incurred by the acquiring entity

Incorrect A.

I only

B.

I and II only

C.

I and III only

D.

None of these items would be part of the acquisition cost.

You answered A. The correct answer is D.

FASB ASC 805-10-25-21 requires that acquisition-related costs be charged to expense. All of these costs are acquisition-related costs and should be expensed in the period incurred.

FASB ASC 805-10-25-23 states the following: