401 Chapter 4
On January 1, 20X1, Opal Machines Inc. purchased all the common shares of Emerald Corp. for $500,000. The subsidiary's equity account balances on the acquisition date were $400,000 of Common Stock and $100,000 of Retained Earnings. In the year of acquisition, Emerald Developers reported net income of $90,000 and declared and paid dividends of $50,000. Based on this information, which of the following accounts are debited in the basic consolidation entry? Multiple choice question. Income from Emerald Corp. for $90,000; Dividends Declared for $50,000. Dividends Declared for $50,000; Investment in Emerald Corp. for $540,000. Common Stock for $400,000; Retained Earnings for $100,000; Income from Emerald Corp. for $90,000. Investment in Emerald Corp. for $500,000.
Common Stock for $400,000; Retained Earnings for $100,000; Income from Emerald Corp. for $90,000.
A parent company owns 100% of the stock of a subsidiary. The parent owes $10,000 to the subsidiary. This amount is recorded as an accounts payable in the books of the parent and an accounts receivable in the books of the subsidiary. If a consolidation entry is not recorded in the consolidation worksheet to remove the effects of this intercompany transaction, which of the following will be the effect in the consolidated balance sheet? Multiple select question. Consolidated assets are overstated by $10,000. Consolidated liabilities are overstated by $20,000. Consolidated assets are understated by $10,000. Consolidated liabilities are overstated by $10,000.
Consolidated assets are overstated by $10,000. Consolidated liabilities are overstated by $10,000.
Identify the accounts that are debited while recording the amortized excess value reclassification entry in the year of acquisition. Multiple select question. Cost of Goods Sold Income from Subsidiary Company Reason: This account is credited. Depreciation Expense Goodwill Impairment Loss
Cost of Goods Sold Depreciation Expense Goodwill Impairment Loss
Andrew Brothers Inc., a consulting firm, acquired 100% of Eric International, Inc.'s common stock on January 1, 20X1. The book value of assets and liabilities of Eric International Inc. on January 1, 20X1 were as follows: Book Value Fair Value Cash $30,000 $30,000 Accounts Receivable 60,000 60,000 Inventory 85,000 73,000 Land 55,000 80,000 Equipment 40,000 25,000 Accounts Payable 43,000 43,000 Bonds Payable 83,000 90,000 Based on this information, calculate the total difference between the fair value and book value of Eric International Inc.'s net assets.
$(9,000) Reason: Fair value of net assets - book value of net assets = (30,000 + 60,000 + 73,000 + 80,000 + 25,000 - 43,000 - 90,000) - (30,000 + 60,000 + 85,000 + 55,000 + 40,000 - 43,000 - 83,000) = 135,000 - 144,000 = (9,000)
A company acquired all of the common shares of another company on January 1, 20X1. The net assets of the subsidiary company included a building that originally cost $750,000 and had an associated accumulated depreciation balance on the acquisition date of $250,000. The fair value of the building on the acquisition date was $600,000. Thus, the building accounts for a differential of $100,000. The building had a remaining economic life of 10 years from the acquisition date. Depreciation expense reported for 20X1 by the parent was $62,000 and by the subsidiary was $40,000. Calculate the balance of the Depreciation Expense account in the consolidated financial statements at the end of 20X1. Multiple choice question. $92,000 $202,000 $102,000 $112,000
$112,000 Reason: Consolidated depreciation = $62,000 + $40,000 + (100,000 ÷ 10) = $112,000.
A company acquires 100% of the common stock of another company on January 1, 20X1. The difference between the amount paid and the book value of the subsidiary's net assets is $105,000. The differential includes excess value related to: Equipment of $75,000, Inventory of $8,000, and Goodwill of $22,000. The equipment had a remaining economic life of 15 years from the date of acquisition (resulting in excess depreciation of $5,000 per year). The entire inventory acquired was sold in the year of acquisition. Management also determined that a $5,000 goodwill impairment loss should be recognized in the consolidated income statement. Calculate the amount of differential to be amortized in the year of acquisition. Multiple choice question. $18,000 $22,000 $8,000 $15,000
$18,000 Reason: Amount of differential amortized in year of acquisition = Inventory + Depreciation on Equipment + Goodwill impairment = $8,000 + $5,000 + $5,000 = $18,000.
On January 1, Year 5, Delta Company acquired 100 percent common stocks of Alpha Company for $1,350,000. On this date, Alpha's total retained earnings and common stock were $220,000 and $880,000, respectively, in its books. Based on this information, the difference between the fair value and the book value of Alpha is _____.
$250,000 Reason: Difference between the fair value and the book value = $1,350,000 − ($220,000 + $880,000) = $250,000
Jasper International Corp. purchases 30% of Sapphire Developers Inc.'s common stock. Sapphire sold its land at a gain. Jasper's share of the differential relating to the land was $10,000. If Jasper's share of Sapphire's reported gain was $36,000, what would be the amount of gain that Jasper would recognize related to the sale of the land? Multiple choice question. $60,000 $36,000 $10,000 $26,000
$26,000 Reason: Gain on sale recognized by Jasper = Jasper's share of gain - Jasper's share of differential = $36,000 - $10,000 = $26,000.
On January 1, 20X1, a company acquired 100% of the common stock of a subsidiary company for $400,000. At the beginning of 20X1, the parent company's retained earnings was $100,000. In 20X1, the parent reported separate operating income of $150,000 and declared dividends of $40,000. The subsidiary reported net income of $80,000 and declared no dividends. The subsidiary's goodwill was deemed to be impaired by $10,000. Calculate the balance of consolidated retained earnings on December 31, 20X1. Multiple choice question. $400,000 $330,000 $280,000 $190,000
$280,000 Reason: Consolidated retained earnings = $100,000 + $150,000 + $80,000 - ($40,000 + $10,000) = $280,000.
Topaz Corp. purchased all of Zircon Corp.'s common shares on January 1, 20X1. On the acquisition date, the book value of Zircon's assets consisted of Inventory of $45,000, Land of $120,000, and Equipment of $75,000. On the acquisition date, the fair values were: Inventory $55,000, Land $150,000, and Equipment $80,000. Calculate the fair value increment of Zircon's assets. Multiple choice question. $55,000 $150,000 $45,000 $80,000
$45,000 Reason: Fair value increment = ($55,000 - $45,000) + ($150,000 - $120,000) + ($80,000 - $75,000) = $10,000 + $30,000 + $5,000 = $45,000.
On the acquisition date, the cost of equipment was $400,000 and the accumulated depreciation on equipment was $150,000 on the subsidiary's books. The fair value of that equipment was $250,000. On all subsequent consolidation dates (assuming the subsidiary owns the same assets), which of the following is the the accumulated depreciation consolidation entry? Multiple choice question. Debit Accumulated Depreciation for $150,000; Credit Equipment for $150,000. Debit Equipment for $150,000; Credit Accumulated Depreciation for $150,000. Debit Depreciation for $150,000; Credit Accumulated Depreciation for $150,000. Debit Accumulated Depreciation for $150,000 and Cash for $100,000; Credit Equipment for $250,000.
Debit Accumulated Depreciation for $150,000; Credit Equipment for $150,000.
Walker Corp. purchased 100% of the common stock of Jackson Inc. for $500,000. The fair value of Jackson's identifiable assets and liabilities is $450,000, which is equal to their book values. Which of the following characterizes the excess value reclassification entry? Multiple choice question. Debit Cash for $50,000; Credit Income from Investment for $50,000 Debit Goodwill for $50,000; Credit Cash for $50,000 Debit Goodwill for $50,000; Credit Investment in Jackson Inc. for $50,000 Debit Investment in Jackson Inc. for $50,000; Credit Cash for $50,000
Debit Goodwill for $50,000; Credit Investment in Jackson Inc. for $50,000
Which of the following is the journal entry to record the amortization of excess acquisition price? Multiple choice question. Debit Cash; Credit Investment in Investee Company Debit Income from Investee; Credit Cash Debit Investment in Investee Company; Credit Income from Investee Company Debit Income from Investee Company; Credit Investment in Investee Company
Debit Income from Investee Company; Credit Investment in Investee Company
Bradley Bank Corp. acquired 100% of Harry Bank Inc.'s common stock. There was a positive differential between the fair value and book value of the net assets of Harry Bank on the acquisition date. When Bradley compared the fair value and book value of the assets and liabilities of Harry, it found that there was an increase in the value of the inventory, an increase in the value of the land, and a decrease in the value of equipment. The entire differential amount was identifiable. Based on this information, which of the following is the excess value reclassification entry? Multiple choice question. Debit Equipment and Debit Investment in Harry Bank Inc.; Credit Inventory and Credit Land. Debit Inventory, Debit Land; Credit Equipment, Credit Investment in Harry Bank Inc. Debit Inventory and Debit Land; Credit Cash. Debit Investment in Harry Bank Inc, Debit Inventory, Debit Land; Credit Cash.
Debit Inventory, Debit Land; Credit Equipment, Credit Investment in Harry Bank Inc.
Betty Developers Corp. purchased the stock of Barb Materials Inc. for $550,000. However, the fair value of Barb Materials' net assets was $600,000. Which of the following is the journal entry to record the purchase of stock of Barb Materials? Multiple choice question. Debit Cash for $600,000; Credit Investment in Barb Materials for $600,000. Debit Investment in Barb Materials Inc. for $600,000; Credit Cash for $600,000. Debit Cash for $550,000; Gain on Bargain Purchase for $50,000; Credit investment in Barb Materials Inc. for $600,000. Debit Investment in Barb Materials Inc. for $600,000; Credit Cash for $550,000 and Gain on Bargain Purchase for $50,000.
Debit Investment in Barb Materials Inc. for $600,000; Credit Cash for $550,000 and Gain on Bargain Purchase for $50,000.
On January 1, 20X2, a company acquired 100% of the common stock of another company for $500,000. In the year of acquisition, the subsidiary company earned net income of $65,000. Which of the following is the journal entry to record the income from subsidiary in the books of the parent company in the initial year of investment? Multiple choice question. Debit Income from Investee Company for $65,000; Credit Investment in Investee Company for $65,000 Debit Investment in Investee Company for $65,000; Credit Cash for $65,000 Debit Cash for $65,000; Credit Investment in Investee Company for $65,000 Debit Investment in Investee Company for $65,000; Credit Income from Investee Company for $65,000
Debit Investment in Investee Company for $65,000; Credit Income from Investee Company for $65,000
Assume a company holds 100% of the common stock of another company. In the second year of ownership, which of the following entries would be recorded in the books of the parent company to record the income from the subsidiary company? Multiple choice question. Debit Income from Investee Company; Credit Investment in Investee Company Debit Cash; Credit Income from Investee Company Debit Investment in Investee Company; Credit Cash Debit Investment in Investee Company; Credit Income from Investee Company
Debit Investment in Investee Company; Credit Income from Investee Company
Winter Corp. acquired 100% of Summer Corp.'s common stock for $750,000 on January 1, 20X1. $650,000 of the acquisition amount was paid in cash and the remaining amount was paid by issuing 10% notes. What was the journal entry to record the initial investment in Summer in the books of Winter on January 1, 20X1? Multiple choice question. Debit Common Stock for $750,000; Credit Cash for $650,000 and Credit Notes Payable for $100,000. Debit Investment in Summer Corp. for $750,000; Credit Cash for $650,000 and Credit Notes Payable for $100,000. Debit Cash for $650,000 and Debit Notes Payable for $100,000; Credit Investment in Summer Corp. for $750,000. Debit Investment in Summer Corp. for $650,000; Credit Cash for $650,000.
Debit Investment in Summer Corp. for $750,000; Credit Cash for $650,000 and Credit Notes Payable for $100,000.
Jupiter Electrical Inc. acquired 100% of Synergy Electrical Inc.'s common stock for $850,000. The consideration for the acquisition includes the issuance of $500,000 in bonds and the remaining $350,000 was paid in cash. Which of the following is the journal entry to record the acquisition? Multiple choice question. Debit Bonds Payable for $500,000 and Cash for $350,000; Credit Investment in Synergy for $850,000. Debit Common Stock for $850,000; Credit Investment in Synergy for $850,000. Debit Bonds Payable for $500,000; Credit Investment in Synergy for $500,000. Debit Investment in Synergy for $850,000; Credit Bonds Payable for $500,000 and Cash for $350,000.
Debit Investment in Synergy for $850,000; Credit Bonds Payable for $500,000 and Cash for $350,000.
On January 1, 20X1, a company purchased 100% of the common stock of another company for $650,000. The subsidiary's equity accounts had the following balances on the acquisition date: Common Stock, $550,000 and Retained Earnings, $100,000. The subsidiary company reported net income of $80,000 and declared and paid dividends of $25,000 during the year of acquisition. Calculate the book value of the parent company's investment at the end of the acquisition year. Multiple choice question. $705,000 $800,000 $450,000 $650,000
$705,000 Reason: Ending book value of the investment = $550,000 + ($100,000 + $80,000 - $25,000) = $705,000.
Emily Motors Inc. purchased 100% of Larry Devices Corp.'s common stock for $850,000. On the date of acquisition, Larry Devices' buildings had a fair value of $375,000. The cost of the building was $550,000 and the accumulated depreciation was $250,000. What is the amount of the differential associated with Larry Devices' buildings on the date of acquisition? Multiple choice question. $125,000 $75,000 $300,000 $175,000
$75,000 Reason: Buildings' Differential = $375,000 - ($550,000 - $250,000) = $75,000.
On January 1, 20X1, Ruby Inc. acquired 100% of Topaz Corp.'s common stock for $550,000. During 20X1, Ruby earned separate operating income of $80,000 and Topaz reported net income of $50,000. In the same year, the amortization of the differential relating to the equipment was $10,000 and the goodwill impairment loss was $8,000. The consolidated net income at the end of 20X1 is $
112,000 80000+50000-10000-8000
Select all that apply Dardwell Corp. acquired 70% of Flamell Company's common stock for $350,000. The fair value of the noncontrolling interest on the acquisition date was $150,000. Also on the acquisition date, Flamell had a total of $50,000 in declared dividends. In recording the basic consolidation entry, which of the following accounts would be credited? Multiple select question. Retained Earnings Dividends Declared Income from Flamell Investment in Flamell NCI in NA of Flamell Common Stock NCI in NI of Flamell
Dividends Declared Investment in Flamell NCI in NA of Flamell
On January 1, 20X1, Lavender Corp. purchased 100% of the common stock of Violet Inc. for $500,000. The balances in the subsidiary's equity accounts on that date were Common Stock of $350,000 and Retained Earnings of $150,000. Violet earned net income of $75,000 and declared and paid dividends of $30,000 in the year of acquisition. The subsidiary's retained earnings had an ending balance of $
195,000 150000+75000-30000
A company acquired 100% of the common stock of another company for $500,000. The book value of the net assets of the subsidiary company was $400,000. The fair value increment of the net assets of the subsidiary company was $80,000. The excess of the total differential over the fair value increment was ________ and this amount was attributable to _______.
20,000 Goodwill
Amber Materials Inc. acquired 100% of Coral Designs Corp.'s common stock for $565,000. The book value of the net assets of Coral Designs consists of Common Stock of $320,000 and Retained Earnings of $160,000. Based on this information, calculate the difference between fair value and book value. Multiple choice question. $42,500 $160,000 $100,000 $85,000
85,000 Reason: Difference between fair value and book value = $565,000 - ($320,000 + $160,000) = $85,000.
Identify the effect of consolidation worksheet entries on the Income from Subsidiary account because of changes in the differential. Multiple choice question. Amortization of excess value is reclassified from income statement accounts to Income from Subsidiary account. Amortization of excess value is reclassified from Income from Subsidiary account to income statement accounts. Amortization of excess value is reclassified from Investment in Subsidiary account to individual accounts. Amortization of excess value is reclassified from individual accounts to Investment in Subsidiary account.
Amortization of excess value is reclassified from Income from Subsidiary account to income statement accounts.
In the second year of ownership of a 100%-owned subsidiary, which of the following journal entries would be recorded in the books of the investor under the equity method? Multiple select question. An entry to record the dividends declared by the subsidiary. An entry to record the income from the subsidiary. An entry to record the consideration paid to acquire the stock. An entry to record the amortization of excess acquisition price.
An entry to record the dividends declared by the subsidiary. An entry to record the income from the subsidiary. An entry to record the amortization of excess acquisition price.
If an investee sells an asset with a differential at a gain, the gain to be recognized by the investor is calculated by subtracting the investor's unamortized portion of the from the investor's share of the gain.
Blank 1: differential
A company acquired 100% of the common stock of another company. There was a positive differential between the fair value and the book value of the net assets of the subsidiary company. The reasons for the differential were an increase in the value of inventory, an increase in the value of equipment, a decrease in the value of buildings, and an increase in bonds payable. Which of the following accounts will be credited in the excess value reclassification entry? Multiple select question. Common Stock Inventory Bonds Payable Buildings Investment in Subsidiary Stock
Bonds Payable Buildings Investment in Subsidiary Stock
Assume a company acquired 100% of the stock of another company and the differential was $60,000 on the acquisition date. The differential resulted from a building undervalued by $40,000 and goodwill. The building had a remaining life of 10 years from the date of acquisition. Which of the following accounts is debited in the excess value reclassification entry? Multiple select question. Building for $40,000 Investment in Investee Company for $56,000 Goodwill for $20,000 Accumulated Depreciation for $4,000
Building for $40,000 Goodwill for $20,000
Assume a company purchases the stock of another company by paying cash. The acquirer pays less than the fair value of the acquiree's net assets. Which of the following accounts is credited in the journal entry to record the purchase of the stock? Multiple select question. Income from Investment Investment in Subsidiary Gain on Bargain Purchase Cash
Gain on Bargain Purchase Cash
If a differential exists because of goodwill, which of the following accounts is debited in the excess value reclassification entry? Multiple choice question. Investment Cash Income from Investment Goodwill
Goodwill
Which of the following accounts is debited when recording the basic consolidation entry? Multiple choice question. Investment in Subsidiary Company Noncontrolling Interests in NA of Subsidiary Company Income from Subsidiary Dividends declared
Income from Subsidiary
A company acquired 100% of the stock of another company on January 1, 20X1. There was a positive differential between the fair value and the book value of the net assets. The reasons for the differential were an increase in the value of inventory, an increase in land, a decrease in equipment, and an increase in bonds payable. Which of the following accounts would be debited in the excess value reclassification entry? Multiple select question. Equipment Inventory Bonds Payable Land
Inventory Land
Dardwell Corp. acquired 70% of Flamell Company's common stock for $350,000. The fair value of the noncontrolling interest on the acquisition date was $150,000. Also on the acquisition date, Flamell had a total of $50,000 in declared dividends. In recording the basic consolidation entry, which of the following accounts would be credited? Multiple select question. Investment in Flamell NCI in NI of Flamell Retained Earnings Income from Flamell Dividends Declared Common Stock NCI in NA of Flamell
Investment in Flamell Dividends Declared NCI in NA of Flamell
Assume a company acquired 100% of the common stock of another company. The subsidiary's equity section of its balance sheet only included Common Stock and Retained Earnings. The subsidiary reported net income and declared dividends during the current year. Based on this information, which of the following accounts is involved in the basic consolidation entry? Multiple select question. Goodwill Impairment Loss Investment in Investee Company Income from Investee Company Common Stock Depreciation Expense
Investment in Investee Company Income from Investee Company Common Stock
If a company acquires the stock of another company at a price less than its fair value, which of the following accounts is debited in the entry to record the acquisition? Multiple choice question. Common Stock of Subsidiary Investment in Subsidiary Gain on Bargain Purchase Income from Subsidiary
Investment in Subsidiary
The excess value (differential) reclassification entry reclassifies the differential from _____. Multiple choice question. Investment in Subsidiary account to individual accounts that needs to be revalued individual accounts that needs to be revalued to Investment in Subsidiary account Income from Subsidiary account to individual accounts that needs to be revalued individual accounts that needs to be revalued to Income from Subsidiary account
Investment in Subsidiary account to individual accounts that needs to be revalued
Which of the following is true of the accumulated depreciation consolidation entry? Multiple choice question. It eliminates acquisition date accumulated depreciation of the investee. It eliminates acquisition date accumulated depreciation of the investor. It is recorded on the books of the investor. It allows the investor to record a gain as part of the acquisition.
It eliminates acquisition date accumulated depreciation of the investee.
Identify the effect of the consolidation worksheet entry for excess value (differential) for opening inventory. Multiple choice question. It decreases consolidated closing inventory. It increases consolidated closing inventory. It increases consolidated cost of goods sold. It decreases consolidated cost of goods sold.
It increases consolidated cost of goods sold.
Brown Materials Inc. acquires 100% of the stock of White Motors Corp. for $550,000. The book value of the net assets of White is $500,000 on the acquisition date. The differential is attributable to land. Which of the following accounts is debited in the excess value reclassification entry? Multiple choice question. Cash Land Investment in White Corp. Stock Income from White Corp.
Land
Implicit Goodwill
Portion of Differential that represents goodwill
Which of the following errors will lead to a positive differential? Multiple select question. The acquired company failed to record an asset acquisition in its accounts. The acquired company did not follow generally accepted accounting principles in maintaining its accounting records. The acquired company expensed some assets instead of capitalizing them. The acquired company carries all of its fixed assets in the balance sheet at book value.
The acquired company failed to record an asset acquisition in its accounts. The acquired company did not follow generally accepted accounting principles in maintaining its accounting records. The acquired company expensed some assets instead of capitalizing them.
Which of the following clearly leads to an error in the books of the acquired company? Multiple choice question. The acquired company has not recorded any goodwill in its books. The acquired company sold an asset before the acquisition and correctly recorded a gain in its books. The acquired company carries its fixed assets at amortized historical cost. The acquired company has not followed generally accepted accounting principles.
The acquired company has not followed generally accepted accounting principles.
Which of the following is true of a bargain purchase? Multiple select question. The consideration given in the acquisition is less than the fair value of the acquired net assets. The fair value of net assets of the subsidiary is more than the acquisition price. It is equal to the sum of acquisition price and fair value of assets of the subsidiary. The gain on acquisition is attributable to the acquirer.
The consideration given in the acquisition is less than the fair value of the acquired net assets. The fair value of net assets of the subsidiary is more than the acquisition price. The gain on acquisition is attributable to the acquirer.
What will be the effects of the consolidation entries on the consolidation worksheet? Multiple select question. The entries will reclassify the remaining differential to the appropriate balance sheet accounts. The entries will eliminate the balance in the Investment in Investee account. The entries will eliminate the balance in the Income from Investee Company account. The entries will increase the balance of common stock by the value of common stock of the investee company.
The entries will reclassify the remaining differential to the appropriate balance sheet accounts. The entries will eliminate the balance in the Investment in Investee account. The entries will eliminate the balance in the Income from Investee Company account.
Which of the following are true of the excess value reclassification entry? Multiple select question. The entry, along with the basic consolidation entry, will fully eliminate the investment account. The entry will adjust asset accounts to reflect their fair values as of the acquisition date. The entry assigns the differential amount to accounts that were over- or under-valued as of the acquisition date. The entry will calculate the acquisition value of the investment using appraisal values.
The entry, along with the basic consolidation entry, will fully eliminate the investment account. The entry will adjust asset accounts to reflect their fair values as of the acquisition date. The entry assigns the differential amount to accounts that were over- or under-valued as of the acquisition date.
Which of the following is a reason that the acquisition price could be less than the fair value of the acquired company's net assets? Multiple select question. The seller was motivated to sell the company quickly. The assets of the subsidiary were undervalued on its books. The subsidiary incurs a loss. The liabilities of the subsidiary were overvalued on its books. The parent company incurs a loss in the year preceding acquisition.
The seller was motivated to sell the company quickly. The assets of the subsidiary were undervalued on its books. The liabilities of the subsidiary were overvalued on its books.
Which of the following methods is used to correctly reflect the value of the assets and liabilities of a subsidiary in the consolidated financial statements? Multiple select question. The assets and liabilities of the subsidiary are valued at book value in the consolidation process. The subsidiary's assets and liabilities can be revalued directly on the books of the parent as of the acquisition date. The subsidiary's assets and liabilities can be revalued directly on the books of the subsidiary as of the acquisition date. The accounting basis of the subsidiary may be maintained on the subsidiary's books with revaluations on the consolidation worksheet each period.
The subsidiary's assets and liabilities can be revalued directly on the books of the subsidiary as of the acquisition date. The accounting basis of the subsidiary may be maintained on the subsidiary's books with revaluations on the consolidation worksheet each period.
The Investment in Subsidiary account is debited in the books of an acquiring company to record the purchase of another company's stock in exchange for cash and the issuance of bonds.
True
True or false: The acquisition price of an acquired company cannot be less than the fair value of its net assets. True false question. True False
True Reason: In some cases the acquisition price can be less than the fair value. For example, in distressed situations, the owners of a company may choose to sell it for a amount that is less than the fair value of the individual net assets. A bargain purchase for one party likely results from strong incentives for the seller to liquidate its investment.
Push-down accounting requires Multiple choice question. a revaluation of the subsidiary's assets and liabilities in the consolidation worksheet. a revaluation of the subsidiary's assets and liabilities on the books of the subsidiary. a revaluation of the assets but not the liabilities of the subsidiary in the consolidated process. a revaluation of the subsidiary's assets and liabilities on the books of the parent.
a revaluation of the subsidiary's assets and liabilities on the books of the subsidiary.
All assets and liabilities of a subsidiary should be reflected in consolidated financial statements at their ________ values as of the date of combination.
fair
In a bargain purchase, the fair value of the consideration given is less than the _______ of the company's net assets. Multiple choice question. differential value value of common stock fair value book value
fair value
On the date of acquisition, if the fair value of a subsidiary is more than the fair value of its net identifiable assets, the excess value is referred to as .
goodwill