Goodwill Arises When a Parent Company

question 120

Multiple Choice

Goodwill arises when a parent company:

• A)pays more to acquire a subsidiary company than the market value of the subsidiary's net assets.
• B)pays less to acquire a subsidiary company than the market value of the subsidiary's net assets.
• C)pays more to acquire a subsidiary company than the book value of the subsidiary's net assets.
• D)pays less to acquire a subsidiary company than the book value of the subsidiary's net assets.

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Definitions:

Express Contracts

Contracts in which the terms and conditions are explicitly stated, either orally or in writing, between the parties involved.

Executory

In legal contexts, referring to contracts or obligations that are yet to be fully performed or completed by one or more parties.

Implied-In-Law

A term or condition not expressly stated but assumed to exist due to the nature of the transaction or the parties’ relationship, as recognized by law.

Restatement of the Law

A set of treatises on legal subjects that seek to inform judges and lawyers about general principles of common law.