Most business combinations are an exchange of equal amounts, given markets in which the parties to the business combinations are informed and willing participants in the transaction. Therefore, the existence of a _____________ is expected to be an unusual or rare event.
A)bargain purchase
B)contingent liability
C)carryforward
D)contingent consideration.

Question

Quizplus · Accepted Answer

A bargain purchase occurs when the consideration transferred in a business combination is less than the fair value of the net assets acquired. It is expected to be an unusual or rare event as most business combinations result in an exchange of equal amounts. Contingent liabilities and contingent consideration are common elements in business combinations, while carryforward is not relevant in this context.

Most Business Combinations Are an Exchange of Equal Amounts, Given