What does liabilities assumed mean on the CPA exam?
Liabilities assumed. Obligations the acquirer takes on as part of a combination. They reduce the identifiable net assets and therefore increase goodwill.
Defined against ASC 805-20-25-1.
Which CPA exam sections use liabilities assumed?
Liabilities assumed appears in the BAR section of the CPA exam.
Other terms defined against ASC 805-20
- acquisition-date fair value: What something was worth on the day control changed hands.
Related terms
- goodwill: An asset representing the future economic benefits of acquired assets not separately identified, measured as consideration less identifiable net assets.
- net assets: Assets less liabilities.
- business combination: A transaction in which one entity obtains control of a business.
- bargain purchase gain: The gain recognized when identifiable net assets acquired exceed what was paid.
- asset acquisition: Buying a group of assets that does not amount to a business.
- going concern: The assumption that the entity will keep operating long enough to realize its assets and meet its obligations.