Under the acquisition method of accounting for a business combination, a bargain purchase is
A) Reported as goodwill in the balance sheet.
B) Tested annually for impairment.
C) Reported as a gain in the income statement.
D) Reported as an adjustment to other comprehensive income.

Question

Quizplus · Accepted Answer

A bargain purchase occurs when the fair value of the net assets acquired in a business combination exceeds the consideration paid by the acquirer. In this case, the difference is recognized as a gain in the income statement of the acquirer.

Under the Acquisition Method of Accounting for a Business Combination