Under the provisions of ASC 805-30,in a business combination,when the investment cost exceeds the total fair value of identifiable net assets acquired,which of the following statements is correct?
A)The excess is first assigned to identifiable net assets according to their fair values; then the rest is assigned to goodwill.
B)The difference is allocated first to reduce proportionately (according to market value)non-current assets,then to non-monetary current assets,and any negative remainder is classified as a deferred credit.
C)The difference is allocated first to reduce proportionately (according to market value)non-current assets,and any negative remainder is classified as an extraordinary gain.
D)The difference is allocated first to reduce proportionately (according to market value)non-current,depreciable assets to zero,and any negative remainder is classified as a deferred credit.

Question

Quizplus · Accepted Answer

According to ASC 805-30, in a business combination, the excess of investment cost over the fair value of identifiable net assets acquired is assigned first to the identifiable net assets according to their fair values, and then the remaining excess is assigned to goodwill. Therefore, choice A is the correct answer. The other choices either allocate the excess amount differently or include incorrect classifications such as deferred credit or extraordinary gain.

Under the Provisions of ASC 805-30,in a Business Combination,when the Investment