When Consolidating a Subsidiary Under the Equity Method, Which of the Following

question 87

Multiple Choice

When consolidating a subsidiary under the equity method, which of the following statements is true with regard to the subsidiary subsequent to the year of acquisition?

• A) All net assets are revalued to fair value and must be amortized over their useful lives.
• B) Only net assets that had excess fair value over book value when acquired by the parent must be amortized over their useful lives.
• C) All depreciable net assets are revalued to fair value at date of acquisition and must be amortized over their useful lives.
• D) Only depreciable net assets that have excess fair value over book value must be amortized over their useful lives.
• E) Only assets that have excess fair value over book value must be amortized over their useful lives.

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Definitions:

Environmental Standards

Regulations and criteria set by authorities or organizations to protect the environment from harmful levels of pollutants or to manage the use of natural resources.

Flexibility

The ability to adapt to new, different, or changing requirements or conditions.

Pollution

The introduction of contaminants into the natural environment that cause adverse changes, affecting air, water, and soil quality.

Environmental Standard

Regulations and criteria set by authorities regarding pollutants and emissions to protect the environment and public health.