How is negative goodwill (a bargain purchase) accounted for under IFRS 3, and what should you do before recognizing the gain?

Negative goodwill arises when the fair value of identifiable net assets acquired exceeds the consideration transferred (plus any NCI and previously held interest). Before recognizing anything, IFRS 3 requires you to reassess — bargain purchases are rare, so you must re-verify that you've correctly identified and fair-valued all assets acquired and liabilities assumed (including contingent liabilities and deferred tax) and correctly measured the consideration, NCI, and any prior interest. Often an apparent bargain purchase is really an error or omission (an unrecognized liability or overstated asset value). If, after the reassessment, a gain still remains, it's recognized immediately in profit or loss on the acquisition date (attributed to the acquirer). It is NOT recognized as a liability or deferred. Genuine bargain purchases occur in forced sales, distressed sellers, or where a seller has non-economic motives. The key exam point is the mandatory reassessment first, then a day-one P&L gain.