One Reason a Parent Company May Pay an Amount Less

question 35

Multiple Choice

One reason a parent company may pay an amount less than the book value of the subsidiary's stock acquired is:

• A) an undervaluation of the subsidiary's assets.
• B) the existence of unrecorded goodwill.
• C) an overvaluation of the subsidiary's liabilities.
• D) the existence of unrecorded contingent liabilities.