P Company purchased the net assets of S Company for $225,000.On the date of P's purchase,S Company had no investments in marketable securities and $30,000 (book and fair value)of liabilities.The fair values of S Company's assets,when acquired,were: How should the $45,000 difference between the fair value of the net assets acquired ($270,000)and the consideration paid ($225,000)be accounted for by P Company?
A)The noncurrent assets should be recorded at $ 135,000.
B)The $45,000 difference should be credited to retained earnings.
C)The current assets should be recorded at $102,000,and the noncurrent assets should be recorded at $153,000.
D)An ordinary gain of $45,000 should be recorded.

Question

P Company purchased the net assets of S Company for $225,000.On the date of P's purchase,S Company had no investments in marketable securities and $30,000 (book and fair value)of liabilities.The fair values of S Company's assets,when acquired,were:  How should the $45,000 difference between the fair value of the net assets acquired ($270,000)and the consideration paid ($225,000)be accounted for by P Company?
A)The noncurrent assets should be recorded at $ 135,000. 
B)The $45,000 difference should be credited to retained earnings. 
C)The current assets should be recorded at $102,000,and the noncurrent assets should be recorded at $153,000. 
D)An ordinary gain of $45,000 should be recorded.

Quizplus · Accepted Answer

The Answer of P Company purchased the net assets of S Company for $225,000.On the date of P's purchase,S Company had no investments in marketable securities and $30,000 (book and fair value)of liabilities.The fair values of S Company's assets,when acquired,were:  How should the $45,000 difference between the fair value of the net assets acquired ($270,000)and the consideration paid ($225,000)be accounted for by P Company?
A)The noncurrent assets should be recorded at $ 135,000. 
B)The $45,000 difference should be credited to retained earnings. 
C)The current assets should be recorded at $102,000,and the noncurrent assets should be recorded at $153,000. 
D)An ordinary gain of $45,000 should be recorded.

P Company Purchased the Net Assets of S Company for $225,000.On