Question

Consolidated depreciation expense, subsequent to acquisition, is based upon:

A. Historical cost of the acquired assets
B. Fair value of the acquired assets at the acquisition date
C. Amortized cost of the acquired assets
D. Remaining useful life of the acquired assets

Answer 1

Consolidated depreciation expense subsequent to acquisition is based upon the fair value of the acquired assets at the acquisition date, in adherence with accounting standards.

Step-by-step explanation:

The question pertains to the determination of consolidated depreciation expense after the acquisition of assets. When a company acquires another entity, it must account for the assets it has purchased. The correct basis for calculating the consolidated depreciation expense is the fair value of the acquired assets at the acquisition date.

This approach aligns with the accounting standards that require assets and liabilities from an acquisition to be recognized at their fair value on the acquisition date for the purpose of consolidation. The depreciation is then calculated on this basis over the remaining useful life of the acquired assets.