If a parent company pays more than book value for a 100 percent owned subsidiary,goodwill could arise on the consolidated financial statements.

Question

Quizplus · Accepted Answer

Goodwill arises when a parent company pays more than the fair value of the net assets of a subsidiary. This excess amount represents the implied value of the subsidiary's intangible assets, such as brand recognition and customer loyalty. Goodwill is an example of a noncurrent asset that appears on the consolidated financial statements when a subsidiary is fully owned by the parent company.

If a Parent Company Pays More Than Book Value for a 100