What Is the Primary Difference Between: (I) Accounting for a Business

question 50

Multiple Choice

What is the primary difference between: (i) accounting for a business combination when the subsidiary is dissolved; and (ii) accounting for a business combination when the subsidiary retains its incorporation?

• A) If the subsidiary is dissolved, it will not be operated as a separate division.
• B) If the subsidiary is dissolved, assets and liabilities are consolidated at their book values.
• C) If the subsidiary retains its incorporation, there will be no goodwill associated with the acquisition.
• D) If the subsidiary retains its incorporation, assets and liabilities are consolidated at their book values.
• E) If the subsidiary retains its incorporation, the consolidation is not formally recorded in the accounting records of the acquiring company.