A Goodwill from Consolidation account may rise when a parent acquires a subsidiary company's common stock at a price in excess of the stock's book value.

Question

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Goodwill arises when a company acquires another company for a price that exceeds its net assets' fair value. If a parent company acquires a subsidiary's common stock at a price above its book value, it means that the parent company paid more than the subsidiary's net assets' book value. This excess payment creates goodwill that is recorded on the parent company's balance sheet as a non-current asset.

A Goodwill from Consolidation Account May Rise When a Parent