Calculating Goodwill for a Subsidiary That Has a Minority Interest

question 10

Multiple Choice

Calculating goodwill for a subsidiary that has a minority interest involves:

• A) Taking the parent entity's share of the fair value of the identifiable net assets of the subsidiary and deducting it from the fair value of the consideration paid.
• B) Dividing the fair value of the consideration paid for the subsidiary by the percentage ownership of the parent entity and deducting the fair value of the identifiable net assets of the subsidiary from that amount.
• C) Taking the book value of equity of the subsidiary and deducting the fair value of the consideration paid for the subsidiary.
• D) Dividing the fair value of the identifiable net assets of the subsidiary by the percentage ownership of the parent entity and deducting this amount from the fair value of the consideration paid.
• E) None of the given answers.

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