What does acquisition means in accounting?

Answer 1

In accounting, acquisition refers to the purchase of one company by another, resulting in the acquiring company obtaining control over the acquired company's assets, liabilities, and operations. This typically involves the acquiring company buying a majority stake in the acquired company, allowing it to make decisions and control the operations of the acquired company. The financial statements of the acquiring company will include the assets and liabilities of the acquired company, and any difference between the purchase price and the fair value of the acquired company's net assets will be recorded as goodwill on the acquiring company's balance sheet.