The Net Incomes for Parent and Sub Inc for the Year

question 13

Multiple Choice

The Net Incomes for Parent and Sub Inc for the year ended July 31, 2012 were $120,000 and $60,000 respectively. Assuming once again that the Proprietary Theory was applied, what would be the amount of Goodwill appearing on the Consolidated Balance Sheet on the Date of acquisition, assuming once again that Parent purchased 80% of Sub Inc. for $180,000 on August 1, 2012?

• A) $72,000
• B) $88,000
• C) Nil
• D) Cannot be determined from the information given.

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Definitions:

Value

The importance, worth, or usefulness of something, often considered in terms of financial, social, or personal significance.

Accountability

The obligation of an individual or organization to account for its activities, accept responsibility for them, and disclose the results in a transparent manner.

Specified Time Periods

Predetermined intervals or durations during which particular activities, events, or processes are intended to occur or be completed.

Positive Feelings

Emotions or attitudes that are conducive to happiness and contentment, including optimism and joy.