Final answer:
The main difference between a "basket purchase" of net assets and an acquisition of net assets that qualifies as a business is the way the assets and liabilities are recognized and accounted for. In a basket purchase, the assets and liabilities are recorded at their fair values on the acquirer's balance sheet, whereas in an acquisition of net assets that qualifies as a business, each individual asset and liability is recognized separately.
Step-by-step explanation:
The main difference between a "basket purchase" of net assets and an acquisition of net assets that qualifies as a business is the way the assets and liabilities are recognized and accounted for. In a basket purchase, the assets and liabilities are recorded at their fair values on the acquirer's balance sheet, whereas in an acquisition of net assets that qualifies as a business, each individual asset and liability is recognized separately.
For example, let's say a company acquires another company through a basket purchase. The fair value of the acquired company's assets and liabilities is $1 million. The acquirer would record the entire $1 million as a single line item on its balance sheet. However, if the same acquisition qualifies as a business, the acquirer would recognize each individual asset and liability separately, such as inventory, accounts receivable, bank loans, etc.
This distinction is important because recognizing each individual asset and liability separately provides more detailed information about the financial position and performance of the acquired business.