Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. question 9 a parent buys 60% of a subsidiary in

QUESTION 9 A parent buys 60% of a subsidiary in one year and...

80.2K

Verified Solution

Question

Accounting

QUESTION 9
A parent buys 60% of a subsidiary in one year and then purchases an additional 25% in the next year. How is the second acquisition of 25% treated?
The valuation basis for the subsidiary's net assets was established in the first acquisition when control was obtained. Any differences between transaction prices and the underlying subsidiary book values are adjustments to Additional Paid In Capital.
A gain or loss is recognized from the adjustment to the subsidiary's fair value on the second purchase.
All subsequent purchases are based on the fair values at the time of the first acquisition and any adjustments are recorded as a gain.
The acquisition method views the subsidiary as whole and can only be used if 100% of the subsidiary has been acquired through step acquisitions.
image

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

T 3 A man is walking his dog on level ground in a straight line...

Geometry
Q

Consider the following linear program, which maximizes daily total profit for two products, regular (R), and...

Statistics
Q

Human Physiology Describe the 28-day ovarian cycle (follicle phase & luteal phase), beginning with the development of...

Medical Sciences
Q

An object of mass 0.50 kg is released from the top of a building of height...

Physics
Q

The operating budget process generally concludes with the preparation of the

Accounting
Q

You are provided with the following amounts for Kristeen Flynn for...

Accounting
Q

Lorin Management Services has an unfunded postretirement benefit plan. On December 31,2024, the following data...

Accounting
Q

Albany Corporation purchased equipment on April 1 of Year 1 for $75,000. The asset does...

Accounting
Q

E10-5 Calculating Return on Investment, Residual Income, Determining Effect of Changes in Sales, Expenses, Invested...

Accounting
Q

What are the key sources of rules and guidance relative to ethical and professional responsibilities,...

Accounting
Q

2uestion 4[30 points] The following information is for x-cell Inc a....

Accounting
Q

Question is : you are a financial manager of a company since there is MCO...

Finance