Question

In a business combination in which an acquiring company purchases 100% of the outstanding common stock of another company, if the fair value of the net identifiable assets acquired exceeds the fair value of the consideration given. The excess should be reported as a ___________.

Answer 1

Answer:

It will be reported as gain.

Explanation:

If the fair value of the net identifiable assets acquired exceeds the fair value of the consideration given (purchase cost) will be a negative goodwill.

It will be due to "bargain purchase" and the accounting records the "negative goodwill" as a gain in the income statment