One Reason a Parent Company May Pay an Amount Less

question 35

Multiple Choice

One reason a parent company may pay an amount less than the book value of the subsidiary's stock acquired is:

• A) an undervaluation of the subsidiary's assets.
• B) the existence of unrecorded goodwill.
• C) an overvaluation of the subsidiary's liabilities.
• D) the existence of unrecorded contingent liabilities.

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Definitions:

Greater Tubercles

Projections located on the proximal end of the humerus bone, providing attachment for shoulder muscles.

Flexor Carpi Radialis

A muscle in the forearm that assists in bending the wrist towards the thumb side.

Abduct

Abduct refers to the movement of a limb or another part of the body away from the midline or another part of the body.

Flexor Carpi Ulnaris

A muscle of the forearm that flexes and adducts the hand.