When There Is a Gain on Bargain Purchase at the Acquisition

question 47

Multiple Choice

When there is a gain on bargain purchase at the acquisition date, the net fair value of the identifiable assets and liabilities of the subsidiary is greater than the consideration transferred. Which of the following statements in this situation is FALSE?

• A)The acquirer must firstly reassess the identification and measurement of the subsidiary's identifiable assets and liabilities as well as the measurement of the consideration transferred.
• B)The expectation is that the excess of the net fair value over the consideration transferred is usually the result of measurement errors rather than being a real gain to the acquirer.
• C)Having confirmed the identification and measurement of both amounts paid and net assets acquired, if an excess still exists, it is recognized immediately in profit as a gain on bargain purchase.
• D)Existence of a gain on bargain purchase has no effect on the fair value adjustments when the subsidiary has previously recorded goodwill.

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Definitions:

Neuroplasticity

The malleability of the human brain, its capacity to change and grow especially in response to new environmental input. Includes the capacity of neurons to shift functions to compensate for damage to other cells or because they have been transplanted to a different part of the brain.

Hippocampus

A region of the brain associated with memory formation, spatial navigation, and the processing of emotional responses.

Auditory Cortex

The region of the brain that is primarily involved in processing sound and auditory information.

Cross-fostering Study

is a research method used in behavioral studies where offspring are raised by caregivers not of their own species or genotype to explore environmental influences.