bargain purchase

Definition

Acquiring an asset or company for less than its fair value, creating negative goodwill that accounting standards make you recognize as immediate income. It's so rare that its existence suggests either incredible luck or terrible accounting.

Example Usage

The fire-sale acquisition was treated as a bargain purchase, creating a one-time $20 million gain that we definitely won't mention complicates year-over-year comparisons.

Origin

Accounting treatment for acquisitions below fair value under IFRS and GAAP

Fun Fact

Bargain purchases increased dramatically during the 2008 crisis when banks bought distressed assets at pennies on the dollar, proving that accounting standards do occasionally encounter reality.

Source: Business combination accounting standards

Related Terms

Beginner

earnings call

A quarterly conference call where executives present financial results to analysts and investors, then spend an hour tap-dancing around difficult questions. It's theater performed by people who memorized the phrase 'we remain cautiously optimistic.'

💰 Finance / Accounting

Beginner

liabilities

Everything a business owes to others—debts, obligations, and promises to pay that hang over the company like a financial sword of Damocles. It's the right side of the balance sheet that accountants love to balance against assets, creating the fundamental equation of accounting. Can also mean that person on your team who's more problem than solution.

💰 Finance / Accounting

Intermediate

rollover

The financial practice of moving money from one investment or retirement account to another without triggering tax consequences, because the IRS is generous like that. Also describes what happens to your old web design when you hover over a button, or what vehicles do in unfortunate accidents. In tech, it's that fancy effect where images change when your cursor touches them, making websites feel interactive since 1995.

💰 Finance / Accounting

Intermediate

net present value

The difference between the present value of cash inflows and outflows over time, discounted because a dollar today is worth more than a dollar tomorrow—thank you, inflation and opportunity cost. If it's positive, invest; if negative, run away.

💰 Finance / Accounting

Intermediate

accrued liabilities

Expenses that have been incurred but not yet paid or formally billed—money you owe but haven't written a check for yet. They lurk on the balance sheet as a reminder that obligations don't disappear just because the invoice hasn't arrived.

💰 Finance / Accounting

Beginner

basis of accounting

The fundamental method used to determine when transactions are recorded—either when cash moves (cash basis) or when obligations occur (accrual basis). Like choosing whether to count calories when you eat or when you order.

💰 Finance / Accounting

Translate This Term

See “bargain purchase” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.

Try the Translator

Share This Term

Post on X Share on Facebook Share on LinkedIn

Discover a Term

Beginner

ventures

Risky business undertakings or investments that could either make you rich or teach you expensive lessons about market d...