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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Definitions:

General Duty Clause

A provision in the Occupational Safety and Health Act requiring employers to provide a work environment free from recognized hazards that can cause death or serious physical harm.

Hazardous Fumes

Dangerous gases or vapors produced during various processes, which can pose health risks or environmental hazards if inhaled or released.

Industrial Cleaning

The process of cleaning hazardous areas in industrial facilities such as factories, warehouses, and power plants, often involving the removal of pollutants or contaminants.

Organizational Objectives

The defined goals and aspirations that a company or entity aims to achieve through its operations and strategies.