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?

Multiple Choice

• Negative goodwill is recorded.
• A deferred credit is recorded.
• A gain on bargain purchase is recorded.
• Long-term assets of the acquired company are reduced in proportion to their fair values. Any excess is recorded as a deferred credit.
• Long-term assets and liabilities of the acquired company are reduced in proportion to their fair values. Any excess is recorded as gain.