Which Statement About Negative Goodwill Is True

question 40

Multiple Choice

Which statement about negative goodwill is true?

• A)Negative goodwill is the amount by which the fair value of identifiable net assets acquired exceeds the price paid.
• B)Negative goodwill results when the cash paid for a company exceeds the fair market value of the net assets acquired.
• C)Negative goodwill should be recorded as a direct credit to retained earnings.
• D)Negative goodwill should first be allocated proportionately to reduce the cost of all assets acquired (except long-term investments in marketable securities)on the basis of their relative market values.