How Is Negative Goodwill Treated Under the Acquisition Method

question 31

Multiple Choice

How is negative goodwill treated under the acquisition method?

• A) The acquiring company will report a gain on acquisition.
• B) The acquiring company will report a loss on acquisition.
• C) The negative goodwill will be included in other comprehensive income, as it is essentially an unrealized gain.
• D)The negative goodwill is prorated using the fair values of the acquired company's net assets.

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Definitions:

Morality Bias

The tendency to make judgments or assumptions based on moral standards, which can lead to biased decision-making.

Social Discounting Bias

The tendency to devalue benefits or harms that happen to people who are socially or spatially distant from oneself.

Social Discounting Bias

The tendency to devalue benefits or resources when they are to be shared with larger numbers of people.

Morality Bias

The tendency to make judgments or decisions based on moral considerations, often at the expense of other factors.