Provides principles for allocating the fair value

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Reference no: EM1394046

Business Combinations, provides principles for allocating the fair value of a acquired business. When the collective fair values of the separately identified assets acquired and liabilities assumed exceed the fair value of the consideration transferred, the difference should be:

a. Recognized as an ordinary gain from a bargain purchase.

b. Treated as negative goodwill to be amortized over the period benefited, not to exceed 40 years.

c. Treated as goodwill and tested for impairment on an annual basis.

d. Applied pro rata to reduce, but not below zero, the amounts initially assigned to specific noncurrent assets of the acquired firm.

Reference no: EM1394046

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