Pacific Company acquired Starz Company for $100 million, and recognized $70 million in goodwill. When it recorded the acquisition, Pacific recognized an additional liability not already reported on Starz balance sheet, for a pending lawsuit against Starz, and estimated its value at $12 million. Three months after the date of acquisition, Pacific determined that the present value of the lawsuit liability was really $2 million, because of events occurring subsequent to the date of acquisition.

How is this information reported?

a.Gain on acquisition of $10 million

b.Reduction in Goodwill of $10 million

c.Gain on lawsuit of $10 million

d.Not reported