Gabraile Company acquired Itsy Inc.for a price that was substantially less than the fair value of the identifiable asset acquired.The difference between the fair value of the assets and the bargain purchase price is ________.
A)recorded as negative goodwill
B)reported as a gain that increases income from continuing operations
C)allocated to reduce carrying value for each purchased asset
D)reported as a gain that increases other comprehensive income

Question

Quizplus · Accepted Answer

When a company acquires another for less than the fair value of its net identifiable assets, the difference is recognized as a gain in the income statement, specifically increasing income from continuing operations.

Gabraile Company Acquired Itsy Inc