A Goodwill from Consolidation Account May Rise When a Parent

question 43

True/False

A Goodwill from Consolidation account may rise when a parent acquires a subsidiary company's common stock at a price that is less than the stock's book value.

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Definitions:

Trade or Business

Activity conducted for the purpose of earning income or profit, involving regular and continuous activities in a particular field.

Deemed Worthless

A term referring to assets that have become valueless and are recognized as a loss for tax purposes.

Long-Term Loss

A loss realized from the sale of an asset held for more than one year, which can offset long-term capital gains.

Short-Term Loss

A financial loss realized on the sale of an asset held for one year or less, used to offset capital gains and reduce taxable income.