When the parent forms a new subsidiary,
A)there should be no acquisition differential.
B)a gain or loss will usually arise.
C)push down accounting rules must be followed)
D)it should not be included in the company's consolidated financial statements as this would effectively be double-counting.

Question

Quizplus · Accepted Answer

When a parent company forms a new subsidiary, there is no acquisition differential because the parent is not acquiring an existing entity at a different value than its book value; it is creating a new entity.

When the Parent Forms a New Subsidiary