In Accounting for an Acquisition Using the Pooling of Interests

question 36

Multiple Choice

In accounting for an acquisition using the pooling of interests method,which of the following statements is true?

• A)In subsequent periods,the subsidiary's retained earnings is always eliminated by the amount at date of acquisition.
• B)The investment account will always equal the book value of the subsidiary at any date.
• C)Any goodwill will have an indefinite life.
• D)Any goodwill must be amortized over 20 years.
• E)The excess of fair value over book value of the net assets of a subsidiary is amortized over their useful lives.

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Definitions:

Conformity

The act of matching attitudes, beliefs, and behaviors to group norms or societal standards.

Obedience

The act of following orders or instructions, especially from an authority figure, without question.

Social Loafing

The phenomenon in which each individual contributes a little less as more individuals are added to a task; a source of inefficiency when working in teams.

Recognize Individual

The act of acknowledging and respecting the uniqueness and identity of an individual person.