A Newly Acquired Subsidiary Had Pre-Existing Goodwill on Its Books

question 16

Multiple Choice

A newly acquired subsidiary had pre-existing goodwill on its books.The parent company's consolidated balance sheet will

• A)not show any value for the subsidiary's pre-existing goodwill.
• B)treat the goodwill similarly to other intangible assets of the acquired company.
• C)not show any value for the pre-existing goodwill unless all other assets of the subsidiary are stated at their full fair value.
• D)always show the pre-existing goodwill of the subsidiary at its book value.

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Definitions:

Aggregate Demand

This term refers to the total amount of goods and services demanded in the economy at a given overall price level and in a given time period.

Laissez Faire

An economic policy or attitude of letting markets operate without government interference or regulation.

Recessions

Periods of temporary economic decline during which trade and industrial activity are reduced, typically recognized by a fall in GDP in two successive quarters.

Depression

A severe and prolonged downturn in economic activity, characterized by significant declines in GDP, high unemployment, reduced consumer spending, and deflation.