When the acquisition differential is calculated and allocated, what will the consequence be of a "bargain purchase"?
A) The acquisition differential will always be negative.
B) The goodwill balance will always be negative.
C) The fair value of the assets will always have been overstated.
D)Both the acquisition differential and goodwill balances will always be negative.

Question

Quizplus · Accepted Answer

A "bargain purchase" occurs when the fair value of the assets acquired exceeds the purchase price paid. In this case, there is no acquisition differential as the net assets acquired have a fair value greater than the purchase price. Therefore, the goodwill balance will always be negative.

When the Acquisition Differential Is Calculated and Allocated, What Will