In a business combination in which an acquiring company purchases 100% of the outstanding common stock of another company, if th

Question

3 years ago

8

In a business combination in which an acquiring company purchases 100% of the outstanding common stock of another company, if th

e fair value of the net identifiable assets acquired exceeds the fair value of the consideration given. The excess should be reported as a ___________.

Business

1 answer:

spin [16.1K] · Answer 1 · 2022-07-29T03:24:24+03:00

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 <u>negative goodwill.</u>

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