When the acquisition price of an acquired firm is less than the fair value of the identifiable net assets, all of the following are recorded at fair value EXCEPT:
A) Assumed liabilities.
B) Current assets.
C) Long-lived assets.
D) Each of these is recorded at fair value.

Question

Quizplus · Accepted Answer

In an acquisition, when the acquisition price is less than the fair value of the identifiable net assets, it results in a gain on a bargain purchase. However, all identifiable assets acquired and liabilities assumed are still recorded at their fair values, including assumed liabilities, current assets, and long-lived assets.

When the Acquisition Price of an Acquired Firm Is Less