Atold Corporation reports goodwill of $40 million on acquisition of Benholm Company. One month later, Atold learns that Benholm's portfolio of AFS debt investments is worth $3 million more than estimated at the date of acquisition. How is this reported, if the information is (1) a better estimate of the portfolio's value at the date of acquisition (within the measurement period), or (2) is due to events occurring subsequent to the acquisition (after the measurement period).

Question

Quizplus · Accepted Answer

Within the measurement period, the correction of the original acquisition entry increases investments and reduces goodwill. After the measurement period, changes in the value of AFS debt investments are reported normally, in OCI.

Atold Corporation Reports Goodwill of $40 Million on Acquisition of Benholm