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

question 22

Multiple Choice

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

• A) treat the goodwill the same as other intangible assets of the acquired company.
• B) will always show the pre-existing goodwill of the subsidiary at its book value.
• C) not show any value for the subsidiary's pre-existing goodwill.
• D) do an impairment test to see if any of it has been impaired.

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Definitions:

Budget Constraint

Represents the combinations of goods and services a consumer can purchase with their income at current prices.

Prices

The amount of money or exchange value that is asked for goods and services in the market.

Monthly Income

The total amount of income received on a monthly basis from all sources including wages, salaries, benefits, and investments.

Hot Dog

A cooked sausage, traditionally grilled or steamed and served in a sliced bun as a fast-food.