When a subsidiary is acquired sometime after the first day of the fiscal year, which of the following statements is true?
A) Income from subsidiary is not recognized until there is an entire year of consolidated operations.
B) Income from subsidiary is recognized from date of acquisition to year-end.
C) Excess cost over acquisition value is recognized at the beginning of the fiscal year.
D) No goodwill can be recognized.
E) Income from subsidiary is recognized for the entire year.

Question

Quizplus · Accepted Answer

Income from the subsidiary is recognized from the date of acquisition to the year-end, as the parent company only has control and ownership from that point forward.

When a Subsidiary Is Acquired Sometime After the First Day