• 1 Marks

FA – Nov 2012 – L1 – SA – Q21 – Financial Statements Preparation

Identifying the difference between purchase consideration and the value of total tangible assets.

The difference between the purchase consideration and the value of total tangible assets taken over is:

Goodwill or purchase bargain

Explanation:
The correct answer is Goodwill or purchase bargain because goodwill is the excess of purchase consideration over the fair value of identifiable tangible assets. Conversely, if the purchase consideration is less than the value of the tangible assets, it results in a purchase bargain.

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