When a parent acquires an additional interest in a subsidiary, the change in ownership interest is accounted for as an adjustment against goodwill.

Question

Quizplus · Accepted Answer

When a parent acquires an additional interest in a subsidiary, the change in ownership interest is accounted for as a transaction between equity owners and not as an adjustment against goodwill. The carrying amount of the subsidiary's net assets is adjusted to their fair value at the acquisition date, and any excess of the consideration transferred over the fair value of the net assets acquired is recognized as goodwill.

When a Parent Acquires an Additional Interest in a Subsidiary