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:

Endothermic

Refers to a process or reaction that takes in energy from the environment, usually as heat.

Exothermic

A chemical process that releases energy to its surroundings, usually in the form of heat.

Free Radical Chain Reaction

A sequence of reactions where free radicals, generated in an initial step, propagate and react with other molecules to produce stable products, typically involving a chain initiation, propagation, and termination step.

Bond Dissociation Energies

The energy required to break a specific chemical bond in a molecule into two parts, under specified conditions.