In a transaction accounted for using the acquisition method where consideration transferred is less than fair value of net assets acquired, which statement is true? Multiple Choice Negative goodwill is recorded. A deferred credit is recorded. A gain on bargain purchase is recorded. Long-term assets of the acquired company are reduced in proportion to their fair values. Any excess is recorded as a deferred credit. Long-term assets and liabilities of the acquired company are reduced in proportion to their fair values. Any excess is recorded as gain.

In a transaction accounted for using the acquisition method where consideration transferred is less than fair value of net assets acquired, which statement is true? Multiple Choice Negative goodwill is recorded. A deferred credit is recorded. A gain on bargain purchase is recorded. Long-term assets of the acquired company are reduced in proportion to their fair values. Any excess is recorded as a deferred credit. Long-term assets and liabilities of the acquired company are reduced in proportion to their fair values. Any excess is recorded as gain.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

In a transaction accounted for using the acquisition method where consideration
transferred is less than fair value of net assets acquired, which statement is true?
Multiple Choice
Negative goodwill is recorded.
A deferred credit is recorded.
A gain on bargain purchase is recorded.
Long-term assets of the acquired company are reduced in
proportion to their fair values. Any excess is recorded as a
deferred credit.
Long-term assets and liabilities of the acquired company are
reduced in proportion to their fair values. Any excess is recorded
as gain.

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