A company acquires the assets and liabilities of another company, paying the former owners cash plus an earnings contingency. A gain on acquisition is reported in income if:
A) The cash paid is less than the book value of the net assets acquired.
B) The cash paid plus the present value of the earnings contingency is less than the fair value of the identifiable net assets acquired.
C) The cash paid plus the present value of the earnings contingency is less than the fair value of the tangible net assets acquired.
D) The cash paid is less than the fair value of identifiable net assets acquired.
Correct Answer:
Verified
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