Under the Acquisition Method of Accounting for a Business Combination

question 32

Multiple Choice

Under the acquisition method of accounting for a business combination when the parent company has acquired only 90% of the voting stock of a subsidiary,

• A) 10% of the goodwill will be reported in a separate section of the balance sheet because it belongs to the noncontrolling interest.
• B) The consolidated balance sheet will report 100% of the value of goodwill.
• C) The consolidated balance sheet will report 90% of the value of goodwill.
• D) Goodwill will be amortized over its useful life or 40 years whichever comes first.

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Definitions:

Recombinant Gene

A gene that has been created by combining DNA from two or more different sources.

Functional Enzymes

Proteins that act as catalysts for biochemical reactions within living organisms, maintaining the body's metabolism.

Transformation

The incorporation of genetic material into a cell, thereby changing its phenotype. The conversion of a normal cell to a cancer cell (called a malignant transformation).

Plasmids

Small, circular, double-stranded DNA molecules found in bacteria and some yeasts that can replicate independently of chromosomal DNA.