If the NPV Estimates for a Project Are the Same

question 8

Multiple Choice

If the NPV estimates for a project are the same for the parent and for the subsidy,then ___________ exists.

• A)asymmetry
• B)symmetry
• C)parity
• D)equality

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Definitions:

Subsidiary

A company that is completely or partially owned and controlled by another company, known as the parent company.

Fair Value

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Parent-Company Extension Method

An accounting approach used in consolidation, where the parent company's financial statements extend to include the subsidiary's transactions and balances.

Goodwill

Goodwill is an intangible asset that arises when a company acquires another business for more than the fair value of its net identifiable assets.