Where a Parent Acquires Additional Shares in a Subsidiary Subsequent

question 20

Multiple Choice

Where a parent acquires additional shares in a subsidiary subsequent to obtaining control the change is accounted for:

• A) in current year profit or loss;
• B) as an equity transaction;
• C) as an increase in the investment account;
• D) as an adjustment to goodwill.

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Definitions:

Winding Up

The process of liquidating a company's assets and distributing the proceeds to creditors and shareholders, effectively closing the business.

Optimize Return

To make adjustments or take actions that maximize the benefits or profits gained from an investment or activity.

Dissociates

The act of separating or detaching oneself from a legal, business, or personal relationship.

Limited Liability Company

A legal entity where the owners are protected from personal liability for the debts of the company beyond their initial investment.