Under the Full Goodwill Method

question 48

Multiple Choice

Under the full goodwill method:

• A) the NCI does not get a share of any equity relating to goodwill.
• B) only goodwill acquired by parent entity will be recognised.
• C) the NCI is measured at the NCI's proportionate share of the acquiree's identifiable assets and liabilities.
• D) acquired goodwill consists of both goodwill of the subsidiary and the premium paid by the parent to acquire control over the subsidiary.

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Definitions:

Profit Margin

A financial ratio that measures the percentage of revenue remaining after all expenses have been deducted from sales.

Net Income

A company’s remaining income after total revenue has had taxes, expenses, and costs deducted from it.

Equity Securities

Financial instruments representing ownership interest in a company, such as stocks, which may provide income through dividends.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, but not control them entirely, typically associated with ownership of 20% to 50% of voting stock.