What Is the Primary Accounting Difference Between Accounting for When

question 58

Multiple Choice

What is the primary accounting difference between accounting for when the subsidiary is dissolved and when the subsidiary retains its incorporation?

• A) If the subsidiary is dissolved, it will not be operated as a separate division.
• B) If the subsidiary is dissolved, assets and liabilities are consolidated at their book values.
• C) If the subsidiary retains its incorporation, there will be no goodwill associated with the acquisition.
• D) If the subsidiary retains its incorporation, assets and liabilities are consolidated at their book values.
• E) If the subsidiary retains its incorporation, the consolidation is not formally recorded in the accounting records of the acquiring company.

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Definitions:

Quantity

The amount or number of a material or product which is available, produced, or consumed.

Price Floor

A government- or authority-imposed minimum price that can be charged for a good or service, intended to prevent prices from falling too low.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers matches the quantity supplied by producers, resulting in no surplus or shortage.

Market Price

The actual selling price of a good or service in the market at which it can be bought or sold.