What is the amount of unamortized acquisition differential after the sale?

Question

Quizplus · Accepted Answer

Unamortized acquisition differential is the difference between the purchase price and the fair value of net identifiable assets acquired in an acquisition. In this case, the purchase price was $2,500,000 and the fair value of net identifiable assets acquired was $2,300,000, providing an acquisition differential of $200,000. Since the company only recognized $50,000 of the acquisition differential, the unamortized amount would be $200,000 - $50,000 = $150,000. However, since the company sold the subsidiary, the unamortized acquisition differential would be reversed and become a gain on sale, resulting in the unamortized amount of $150,000 being added to the $200,000 recognized differential for a total of $350,000. Therefore, the correct answer is C.

What Is the Amount of Unamortized Acquisition Differential After the Sale