When a Parent Company Pays Less Than Book Value for an Investment

question 94

True/False

When a parent company pays less than book value for an investment in a subsidiary,the excess of book value over the cost of the investment should be used to lower the carrying value of the subsidiary's long-term assets (other than long-term marketable securities)in preparing the consolidated financial statements.

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Definitions:

Anthropoids

The suborder of primates that includes New World monkeys, Old World monkeys, and apes (including humans).

Taxonomically

Pertaining to taxonomy, the science of classification, especially in biology for the classification of organisms into a systematic framework such as kingdoms, phyla, and species based on shared characteristics and genetic heritage.

Collarbone (Clavicle)

A bone located horizontally across the front of the shoulder, connecting the arm to the body.

Primates

An order of mammals that includes humans, apes, monkeys, and prosimians, characterized by large brains, forward-facing eyes, and opposable thumbs.