A business combination is accounted for properly as an acquisition. Direct costs of combination, other than registration and issuance costs of equity securities, should be: 

      a. Included in the acquisition cost to be allocated to identifiable assets according to their fair values. 
      b. Capitalized as a deferred charge and amortized. 
     c. Deducted in determining the net income of the combined corporation for the period in which the costs were incurred. 
      d. Deducted directly from the retained earnings of the combined corporation. 

     Explanation 
     Choice "c" is correct. Direct costs are expensed in the period incurred.