When Preparing the Consolidated Balance Sheet on the Date of Acquisition

question 46

Multiple Choice

When preparing the consolidated balance sheet on the date of acquisition, the parent's investment (in subsidiary company) is:

• A) revalued to fair market value.
• B) replaced with 100% of the assets and liabilities of the subsidiary at fair market value.
• C) replaced with 100% of the assets and liabilities of the subsidiary at book value.
• D)replaced with the parent's pro rata share of the assets and liabilities of the subsidiary at fair market value.

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Definitions:

Compromise

A solution to a disagreement where all parties involved agree to concessions to reach a mutually acceptable outcome.