If a Parent Company Acquires Wholly Owned Subsidiary at an Amount

question 48

Multiple Choice

If a parent company acquires wholly owned subsidiary at an amount greater than the book value, the excess should be

• A)allocated to expense on the date of acquisition.
• B)allocated to identifiable assets to the extent of their fair values, with any remainder allocated to goodwill.
• C)allocated to goodwill, with any remainder allocated to the identifiable assets.
• D)set up as a liability to the controlling interest.

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Definitions:

Isotopes

Atoms of the same element that differ in the number of neutrons within their nuclei.

Ions

Atoms or molecules that have gained or lost one or more electrons, thus acquiring a charge.

Acid

A substance that is a hydrogen ion (proton) donor; acids unite with bases to form salts. Compare with base.

Atomic Mass

The mass of an atom expressed in atomic mass units (amu), essentially equivalent to the number of protons and neutrons in the nucleus.