Devon Ltd. acquired 90% of Luka Ltd. for $100,000 less than the fair value. How should this $100,000 be treated on Devon's consolidated financial statements?
A)As goodwill on the consolidated statement of financial position
B)Allocated as fair value increments over Luka's net identifiable assets
C)As a gain on the consolidated statement of comprehensive income
D)As a separate item under shareholders' equity

Question

Quizplus · Accepted Answer

The $100,000 represents a bargain purchase gain, which should be recognized as a gain on the consolidated statement of comprehensive income.

Devon Ltd Acquired 90% of Luka Ltd