_____ In purchase accounting, what is the appropriate manner of accounting for a bargain purchase element (BPE)?
A) Proportionately reduce values assigned to nonmonetary assets and report any remaining unextinguished bargain purchase element as a deferred credit in the balance sheet.
B) Proportionately reduce values assigned to noncurrent assets and report any remaining unextinguished bargain purchase element as a deferred credit in the balance sheet.
C) Proportionately reduce values assigned to nonmonetary assets other than long-term investments and report any remaining unextinguished bargain purchase element as a deferred credit in the balance sheet.
D) Proportionately reduce values assigned to certain assets and report any remaining unextinguished bargain purchase element as an extraordinary gain (if material) in the income statement.
E) None of the above.

Question

Quizplus · Accepted Answer

A bargain purchase element in purchase accounting is recognized as a gain in the income statement, not as a deferred credit or by reducing the values of assets. This gain may be considered extraordinary if it is material and meets the criteria for extraordinary items.

_____ in Purchase Accounting, What Is the Appropriate Manner of Accounting