A Subsidiary Was Acquired for Cash in a Business Combination

Multiple Choice

A subsidiary was acquired for cash in a business combination on December 31, 2016.The purchase price exceeded the fair value of identifiable net assets.The acquired company owned equipment with a fair value in excess of the book value as of the date of the combination.A consolidated balance sheet prepared on December 31, 2016, would

A) ​report the excess of the fair value over the book value of the equipment as part of goodwill.
B) ​report the excess of the fair value over the book value of the equipment as part of the plant and equipment account.
C) ​reduce retained earnings for the excess of the fair value of the equipment over its book value.
D) ​make no adjustment for the excess of the fair value of the equipment over book value.Instead, it is an adjustment to expense over the life of the equipment.