When a Subsidiary Is Acquired Sometime After the First Day

question 61

Multiple Choice

When a subsidiary is acquired sometime after the first day of the fiscal year, which of the following statements is true?

• A) Income from subsidiary is not recognized until there is an entire year of consolidated operations.
• B) Income from subsidiary is recognized from date of acquisition to year-end.
• C) Excess cost over acquisition value is recognized at the beginning of the fiscal year.
• D) No goodwill can be recognized.
• E) Income from subsidiary is recognized for the entire year.

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Definitions:

Demand for Electronic Readers

The consumer desire or market requirement for digital devices designed for reading e-books and similar electronic documents.

Supply

The total amount of a specific good or service that is available to consumers at a given price level, at a specific time.

Equilibrium Price

The cost where the amount of a product or service sought by consumers matches the amount available, achieving equilibrium in the market.