Examlex

Solved

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

question 62

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.


Definitions:

Sight Draft

A financial instrument that is payable on demand when presented to the drawee.

Net Present Value

is a method used in capital budgeting to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Credit Sale

A transaction where the buyer is allowed to pay for goods or services at a later date, as opposed to paying at the time of sale.

Monthly Interest Rate

The interest rate applied to a loan or investment, calculated to reflect the monthly compounding period.

Related Questions