Peanut Entity Acquired Scooby Entity for $500 Million

Multiple Choice

Peanut Entity acquired Scooby Entity for $500 million. The fair value of the net assets of Scooby upon acquisition was $400 million (i.e., goodwill = $100 million) . Six months after acquisition, new information comes to light that suggests that Scooby has an additional deferred tax benefit of $25 million. How should Peanut account for this discovery of information?

A) Write down goodwill by $25 million
B) Recognize a gain upon discovery of $25 million
C) Directly credit retained earnings for $25 million
D) Increase goodwill by $25 million