At the beginning of the current year, each charity combines with another similar charity. In both cases, the similar charity has assets worth $$780,000,$ but with a net book value of $$700,000.$ Neither similar charity has any liabilities.

Both Charity A and Charity B pay $$800,000$ in cash to make their acquisitions.

Charity A acquires a charity that gets most of its resources through exchange transactions. $($It sells cookies and popcorn.$)$

Charity B acquires a charity that gets most of its resources through donations.

Complete the matching below for the accounting by the charities for the acquisitions, specifically for the $$20,000$ excess of cash paid over the fair value of the assets acquired.

Recorded as goodwill

Recorded as

a reduction in Choose...

net assets

Overall effect

of the two

charities'

accounting