In the case of a wholly owned subsidiary, if the fair value of the consideration transferred plus the fair value of the previously held interest is greater than the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary:
A) a gain on bargain purchase results.
B) goodwill has been purchased and must be recognised on consolidation.
C) the difference is treated as a special equity reserve in the acquirer's accounting records.
D) the difference is immediately charged to profit or loss in the period in which the business combination occurred.

Question

Quizplus · Accepted Answer

When the consideration transferred exceeds the net fair value of the identifiable assets, liabilities, and contingent liabilities, the excess is recognized as goodwill on consolidation.

In the Case of a Wholly Owned Subsidiary, If the Fair