In accounting for business combinations, the acquirer must consider which factor?

In accounting for business combinations, the acquirer must consider all relevant facts and circumstances existing at the acquisition date because this comprehensive understanding is essential for accurately reflecting the value and potential of the acquired business. An acquirer needs to assess not just the financial aspects, but also factors such as market conditions, legal obligations, contractual arrangements, and operational synergies that may impact the future performance and valuation of the combined entity.

By taking into account all relevant information, the acquirer can appropriately determine the fair value of assets acquired, liabilities assumed, and any goodwill or bargain purchase gain that may arise from the transaction. This holistic approach ensures that the financial statements represent a true and fair view of the acquired entity's contribution to the overall business after the merger or acquisition.