as titled, is it required? how much detail we need to master about the three methods?
It’s required only if it appears on the exam this June.
Could it appear? Of course it could.
Will it appear? Got me.
I am just confused by this adjustment idea, can you restate that in a simpler manner if it is possinle? thanks
Accounting can’t be explained. It can only be done.
Suppose that the book value of the total assets is $1,000,000, and the market value is $1,200,000. You buy 80% of the company, so you get assets with a book value of $800,000 (= 80% × $1,000,000) and a market value of $960,000.
You allocate the extra $160,000 to the assets based on their market values. If you allocate it to assets that are depreciable/amortizable, then you depreciate/amortize the extra value over the remaining useful lives of those assets.