How is negative goodwill reported on financial statements?
A)On the consolidated SFP as "an excess of fair value over cost of assets acquired" under shareholders' equity
B)On the consolidated SFP as "negative goodwill" between the liabilities and shareholders' equity
C)On the consolidated SCI as "negative goodwill"
D)On the consolidated SCI as a "gain on bargain purchase"

Question

Quizplus · Accepted Answer

Negative goodwill represents a bargain purchase, which is the difference between the fair value of the net assets acquired and the consideration paid. It should be recognized as a gain on the consolidated statement of comprehensive income. Therefore, option D is the correct answer.

How Is Negative Goodwill Reported on Financial Statements