Company X acquires 100 percent of the voting shares of Company Y for $275,000 on December 31,2008.The fair value of the net assets of Company X at the date of acquisition was $300,000.This is an example of a(n):
A)positive differential.
B)bargain purchase.
C)extraordinary loss.
D)revaluation adjustment.

Question

Quizplus · Accepted Answer

The acquisition cost of $275,000 is less than the fair value of the net assets acquired ($300,000), resulting in a bargain purchase.

Company X Acquires 100 Percent of the Voting Shares of Company