Under the Provisions of FASB Statement No

question 14

Multiple Choice

Under the provisions of FASB Statement No.141R,in a business combination,when the fair value of identifiable net assets acquired exceeds the investment cost,which of the following statements is correct?

• A)A gain from a bargain purchase is recognized for the amount that the fair value of the identifiable net assets acquired exceeds the acquisition price.
• B)The difference is allocated first to reduce proportionately (according to market value)non-current assets,then to non-monetary current assets,and any negative remainder is classified as a deferred credit.
• C)The difference is allocated first to reduce proportionately (according to market value)non-current assets,and any negative remainder is classified as an extraordinary gain.
• D)The difference is allocated first to reduce proportionately (according to market value)non-current,depreciable assets to zero,and any negative remainder is classified as a deferred credit.

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Definitions:

Method of Substitution

A technique used to solve systems of equations by solving one equation for one variable and then substituting that expression into another equation.

System of Equations

A set of two or more equations with the same set of unknowns, which are solved together to find a common solution.

Method of Substitution

A technique used to solve systems of equations where one equation is solved for one variable, which is then substituted into other equations.

Hyperbola

A type of smooth curve lying in a plane, defined by its geometric properties or by equations that are not necessarily of the second degree. Specifically, it refers to a conic section that is not a circle, ellipse, or parabola.