A negative acquisition differential:

A) is always equal to negative goodwill.
B) occurs when the fair value of the subsidiary's net assets are less than their carrying amounts.
C) implies that the parent company may have overpaid for its acquisition.
D) cannot occur under the acquisition method.

Negative Acquisition Differential

occurs when the sum of the fair values of identifiable net assets exceeds the cost of acquisition, leading to an immediate gain in the acquirer's financial statement.

Negative Goodwill

A financial situation where the purchase price of a company is less than the fair market value of its assets minus liabilities.

Acquisition Method

An accounting method used to account for business combinations, emphasizing the fair value of the acquired entity.