Business Combinations

Question 1

186. during subsequent measurement period (after the close of a business combo) if additional identifiable assets are recognized, what is the effect on goodwill?

Answer 1

if additional identifiable assets are recognized, goodwill should be reduced.

Question 2

189. when would goodwill be recognized in a business combination?

Answer 2

when The fair value of the investment by the acquiring entity and any non controlling interest in the acquired entity is greater than the fair value of the acquired entity’s net assets.

Note: Goodwill previously recognized by the acquired entity and on its books immediately prior to a business combination is not recognized by the acquiring entity. acquirer will recognize good will only if the above is true.