Question:

In your informed opinion, should there be one method of accounting for all business combinations? If so, which method is theoretically most appropriate? Or do economic circumstances exist that dictate more than one method? If so, which methods would be most appropriate (and under what circumstances)? Regardless of your opinion, be sure to adequately address the advantages and disadvantages of a single method vs. multiple methods.

Note: In answering this question, keep in mind that a business combination could range from an all-stock transaction (a stock swap) to an all-cash transaction. Also keep in mind that some combinations are clearly acquisitions, while others are more like mergers.

Note: While it is OK to rely on chapter 17 for background information, I want you to think beyond that. There is no right answer. Take a position and provide well-reasoned support.