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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