A Newly Acquired Subsidiary Has Pre-Existing Goodwill on Its Books

question 22

Multiple Choice

A newly acquired subsidiary has pre-existing goodwill on its books. The parent company's consolidated balance sheet will:

• A) treat the goodwill the same as other intangible assets of the acquired company.
• B) will always show the pre-existing goodwill of the subsidiary at its book value.
• C) not show any value for the subsidiary's pre-existing goodwill.
• D) do an impairment test to see if any of it has been impaired.

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Definitions:

GATT

The General Agreement on Tariffs and Trade, an international treaty designed to reduce tariffs and other trade barriers.

Dispute Settlement Understanding

A core WTO agreement that outlines how countries can resolve trade disputes under its framework.

WTO

Short for World Trade Organization, an international body aimed at promoting and facilitating free trade by reducing tariffs and other trade barriers.

Tariff

A tax or duty to be paid on a particular class of imports or exports, used by governments to regulate trade.