Kiara Ltd. acquired 90% of Udder Ltd. for $200,000 less than the fair value. How should this $200,000 be treated on Kiara's consolidated financial statements?
A)As goodwill on the consolidated statement of financial position.
B)As a gain on the consolidated statement of comprehensive income.
C)Allocated as fair value increments over Udder's net identifiable assets.
D)As a separate item under shareholders' equity.

Question

Quizplus · Accepted Answer

When an acquisition is made for less than the fair value of the net identifiable assets, the difference is recognized as a gain on the consolidated statement of comprehensive income, not as goodwill or any other allocation.

Kiara Ltd Acquired 90% of Udder Ltd