In a Transaction Accounted for Using the Purchase Method Where

Multiple Choice

In a transaction accounted for using the purchase method where cost is less than fair value,which statement is true?

A) Negative goodwill is recorded.
B) A deferred credit is recorded.
C) Long-term assets of the acquired company are reduced in proportion to their fair values.Any excess is recorded as a deferred credit.
D) Long-term assets of the acquired company are reduced in proportion to their fair values.Any excess is recorded as an extraordinary gain.
E) Long-term assets and liabilities of the acquired company are reduced in proportion to their fair values.Any excess is recorded as an extraordinary gain.