Question

1. ABC Corporation acquires all of the assets and liabilities of XYZ Company, at a price that is significantly higher than the fair value of the identifiable net assets acquired. Four months after the acquisition, a fire destroys some of XYZ's property. How does ABC report this? A. ABC will report a loss on property in income. B. ABC will report more goodwill from the acquisition. C. ABC will not report this event. D. ABC will report less goodwill from the acquisition.

Answer 1

A. ABC will report a loss on property in income

Step-by-step explanation:

The fire made a physical impact on the assets of XYZ

The entry to report the fire in accounting will acknowledge the physical losses in XYZ assets.

Later, at year-end will check the goodwill for impartment and check if the outgoing busines s of XYZ still has that intangible value attached to it or not and, amortize the required amount.