Choose the correct. FASB ASC 805, “Business Combinations,” provides principles for allocating the fair value of an acquired business. When the collective fair values of the separately identified assets acquired and liabilities assumed exceed the fair value of the consideration transferred, the difference should be:a. Recognized as an ordinary gain from a bargain purchase.b. Treated as negative goodwill to be amortized over the period benefited, not to exceed 40 years.c. Treated as goodwill and tested for impairment on an annual basis.d. Applied pro rata to reduce, but not below zero, the amounts initially assigned to specific non-current assets of the acquired firm.
Choose the correct. FASB ASC 805, “Business Combinations,” provides principles for allocating the fair value of an acquired business. When the collective fair values of the separately identified assets acquired and liabilities assumed exceed the fair value of the consideration transferred, the difference should be:a. Recognized as an ordinary gain from a bargain purchase.b. Treated as negative goodwill to be amortized over the period benefited, not to exceed 40 years.c. Treated as goodwill and tested for impairment on an annual basis.d. Applied pro rata to reduce, but not below zero, the amounts initially assigned to specific non-current assets of the acquired firm.
Chapter17: Property Transactions: § 1231 And Recapture Provisions
Section: Chapter Questions
Problem 18DQ
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Choose the correct. FASB ASC 805, “Business Combinations,” provides principles for allocating the fair value of an acquired business. When the collective fair values of the separately identified assets acquired and
liabilities assumed exceed the fair value of the consideration transferred, the difference should be:
a. Recognized as an ordinary gain from a bargain purchase.
b. Treated as negative
c. Treated as goodwill and tested for impairment on an annual basis.
d. Applied pro rata to reduce, but not below zero, the amounts initially assigned to specific non-current assets of the acquired firm.
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