If the cost of a business combination is greater than the acquired interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree:
A) a business combination gain on bargain purchase arises
B) goodwill has been purchased and must be recognised
C) the difference is treated as a special equity reserve in the acquirer's accounting records
D) the difference is treated as a loss and immediately charged to profit or loss of the period in which the business combination occurred.

Question

Quizplus · Accepted Answer

When the cost of a business combination exceeds the net fair value of the identifiable assets, liabilities, and contingent liabilities, the excess is recognized as goodwill.

If the Cost of a Business Combination Is Greater Than