In a Business Combination Accounted for as an Acquisition, How

question 32

Multiple Choice

In a business combination accounted for as an acquisition, how should the excess of fair value of net assets acquired over the consideration paid be treated?

• A) Amortized as a credit to income over a period not to exceed forty years.
• B) Amortized as a charge to expense over a period not to exceed forty years.
• C) Amortized directly to retained earnings over a period not to exceed forty years.
• D) Recorded as an ordinary gain.

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Definitions:

20th Century Contract Law

The legal principles and rules governing contracts that were developed and evolved during the 20th century, focusing on agreements, obligations, and remedies for breach.

Subjective Standard

A criterion for judgment based on personal feelings, tastes, or opinions rather than external facts.

Outward Manifestations

Actions or expressions that show an intention to make an agreement or contract, observable to others.

Parties' Intent

The actual aim or purpose that contracting parties had in mind at the time of entering into an agreement.