In a transaction accounted for using the acquisition method where consideration transferred is less than fair value of net assets acquired, which statement is true?
A. A deferred credit is recorded.
B. A gain on bargain purchase is recorded.
C. Long-term assets and liabilities of the acquired company are reduced in proportion to their fair values. Any excess is recorded as gain.
D. Long-term assets of the acquired company are reduced in proportion to their fair values. Any excess is recorded as a deferred credit.
E. Negative goodwill is recorded.
Answer: B
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Beta, Inc had $10,000 of notes payable coming due on January 10, 2016. As of December 31, 2015, Beta was negotiating with the lender to extend the due date of the note by two additional years. On January 5, 2016, the company used $2,000 of excess cash to pay off part of the note. On January 8, 2016, the refinancing was completed, the $2,000 payment was refunded and added back to the note balance,
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A trustee in bankruptcy may sell the property of the debtor's estate
Indicate whether the statement is true or false
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