On the date of acquisition, the parent's investment (in subsidiary account) is:

Question

Quizplus · Accepted Answer

According to the acquisition method of accounting, the parent's investment in the subsidiary is replaced with 100% of the assets and liabilities of the subsidiary at fair market value on the date of acquisition. This is done to ensure that the consolidated financial statements reflect the true economic substance of the acquisition. Therefore, option B is the correct answer.

On the Date of Acquisition, the Parent's Investment (In Subsidiary