Two common approaches to accounting for acquisition of additional shares in a subsidiary include:
A) The combined tranche method and the single-date method.
B) The step-by-step method and the combined tranche method.
C) The step-by-step method and the single-date method.
D) The step-by-step method and the equity method.
E) The equity method and the single-date method.

Question

Quizplus · Accepted Answer

The two common approaches to accounting for acquisition of additional shares in a subsidiary are the step-by-step method and the single-date method. The step-by-step method involves recording the fair value of assets and liabilities acquired in each tranche of acquisition, while the single-date method involves recording the fair value of the subsidiary as a whole on the date of acquisition. The other options listed are either incorrect or incomplete.

Two Common Approaches to Accounting for Acquisition of Additional Shares