When a Parent Company Acquires a Wholly Owned Subsidiary for an Amount

question 35

True/False

When a parent company acquires a wholly owned subsidiary for an amount in excess of the book value of the net assets acquired, the excess is always allocated to goodwill.

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Definitions:

Equal Pay Act

A U.S. labor law enacted in 1963 aimed at abolishing wage disparity based on sex.

Pay Discrimination

Inequitable compensation among employees that is often based on gender, race, age, disability, or other protected characteristics rather than job performance or qualifications.

Substantially Equal

Describes items or quantities that are nearly identical in value, size, or importance, within a reasonable degree of variation.

Implied Employment Contracts

These are employment agreements not explicitly stated but inferred from actions, circumstances, or oral statements by the employer or employee, suggesting a mutual understanding or expectation regarding the employment relationship.