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Parental Company and Sub Company Were Combined in an Acquisition

Question 11

Multiple Choice

Parental Company and Sub Company were combined in an acquisition transaction. Parental was able to acquire Sub at a bargain price. The sum of the fair values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Parental. After eliminating previously recorded goodwill, there was still some "negative goodwill." Proper accounting treatment by Parental is to report the amount as:


A) paid-in capital.
B) a deferred credit, which is amortized.
C) an ordinary gain.
D) an extraordinary gain.

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