In short
A bargain purchase is a business combination in which the fair value of the identifiable net assets acquired exceeds the consideration transferred (plus any noncontrolling interest and previously held interest).
Key takeaways
- The acquirer first reassesses whether it has identified and measured everything correctly.
- Any remaining excess is recognized as a gain in earnings on the acquisition date.
- It is rare, often arising from a forced sale.
Where it's tested
FAR: Business Combinations & Consolidations — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
The fair value of identifiable net assets acquired exceeds the total of consideration transferred and noncontrolling interest. After reassessing its measurements, the acquirer should: