When Consolidating a Subsidiary Under the Equity Method, Which of the Following

question 16

Multiple Choice

When consolidating a subsidiary under the equity method, which of the following statements is true?

• A) Goodwill is never recognized.
• B) Goodwill required is amortized over 20 years.
• C) Goodwill may be recorded on the parent company's books.
• D) The value of any goodwill should be tested annually for impairment in value.
• E) Goodwill should be expensed in the year of acquisition.

---

Definitions:

Pressure Differences

Variations in pressure between two areas, which can result in fluid or air movement from the higher pressure area to the lower pressure area.

Endothelium

The single layer of cells lining the blood and lymphatic vessels, heart, and other cavities in the body, instrumental in vascular function.

Simple Squamous

Describes a type of epithelial tissue composed of a single layer of flat cells, playing roles in diffusion and filtration.

Pelvic Area

The pelvic area is the lower part of the torso, enclosed by the pelvic bones and containing the reproductive organs, bladder, and rectum.