In a Transaction Accounted for Using the Purchase Method Where

question 72

Multiple Choice

In a transaction accounted for using the purchase method where cost is less than fair value,which statement is true?

• A)Negative goodwill is recorded.
• B)A deferred credit is recorded.
• C)Long-term assets of the acquired company are reduced in proportion to their fair values.Any excess is recorded as a deferred credit.
• D)Long-term assets of the acquired company are reduced in proportion to their fair values.Any excess is recorded as an extraordinary gain.
• E)Long-term assets and liabilities of the acquired company are reduced in proportion to their fair values.Any excess is recorded as an extraordinary gain.

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