Parent Company Acquires Sub Company's Common Shares for Cash

question 18

Multiple Choice

Parent Company acquires Sub Company's common shares for cash.On the date of acquisition,Sub had Goodwill of $100,000 on its books.Which of the following statements regarding Sub's Goodwill on the date of acquisition is correct?

• A)Sub's goodwill is considered an identifiable asset and should therefore be included in Parent Company's Acquisition Differential calculation.
• B)Sub's goodwill is considered an identifiable asset and should therefore be excluded from Parent Company's Acquisition Differential calculation.
• C)Sub's goodwill is not considered an identifiable asset and should therefore be excluded from Parent Company's Acquisition Differential calculation.
• D)Sub's goodwill is not considered an identifiable asset and should therefore be included in Parent Company's Acquisition Differential calculation.

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Definitions:

Outgroup

A social group to which an individual does not identify or belong, often viewed with prejudice or discrimination.

Ingroup Bias

The tendency for people to give preferential treatment or have favorable attitudes towards members of their own group over those from different groups.

Reinforcement

In behavioral psychology, a consequence applied that strengthens a behavior, making it more likely to occur again.

Modeling

A learning process in psychology where individuals learn new behaviors or information by observing and imitating others.