Answer to Question #176466 in Management for Ron

Question #176466

Case 1: Mr Pierre acquired his

buriness for P10,000,000. The

fair Market value of buriners is

P11,000,000.

Will it be more useful if

accounting records were adjusted

corresponding to the fair market

value amount of business? Jutify

your answer.



please🥺


1
Expert's answer
2021-03-30T06:19:23-0400

Yes. The adjust ment will help in recognizing the correct assets and liabilities of the business. Also, it will help in ascertaining the amount of tax to be paid.


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Comments

Kei Hero
27.04.21, 10:06

NO acquisition of business should not be recorded at fair market value but at historical cost. Otherwise, there would be a recording of goodwill on business acquisition which is not permitted within in the current generally accepted accounting principles.

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