When a Subsidiary Is Acquired Sometime After the First Day

question 61

Multiple Choice

When a subsidiary is acquired sometime after the first day of the fiscal year, which of the following statements is true?

• A) Income from subsidiary is not recognized until there is an entire year of consolidated operations.
• B) Income from subsidiary is recognized from date of acquisition to year-end.
• C) Excess cost over acquisition value is recognized at the beginning of the fiscal year.
• D) No goodwill can be recognized.
• E) Income from subsidiary is recognized for the entire year.

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Definitions:

Negotiation

The process of discussing and arriving at a mutual agreement between parties, often involving compromise or conciliation.

Depositary Bank

A financial institution that holds and manages securities for its clients, facilitating the trading of these securities.

Payor Bank

The bank that is directed by a check or draft to pay a certain amount of money to the person or entity named on the check.

On-Us Item

A banking term referring to a check or draft that is presented for payment by the same bank upon which it is drawn.