What does acquisition-date fair value mean on the CPA exam?
Acquisition-date fair value. What something was worth on the day control changed hands. Everything in a business combination is measured at that one date, including any interest the acquirer already held.
Defined against ASC 805-20-30-1.
Which CPA exam sections use acquisition-date fair value?
Acquisition-date fair value appears in the FAR section of the CPA exam.
Other terms defined against ASC 805-20
- liabilities assumed: Obligations the acquirer takes on as part of a combination.
Related terms
- business combination: A transaction in which one entity obtains control of a business.
- fair market value: The price at which property would change hands between a willing buyer and a willing seller, neither under compulsion and both reasonably informed.
- built-in loss: Loss that already existed in property before it changed hands, measured at the transfer date.
- present value: What a future amount is worth today, once a discount rate has been applied for the waiting.
- net realizable value: Estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation.
- balance sheet date: The last day of the reporting period.