The full goodwill method is in accordance with which concept of consolidation?
A)proprietary concept
B)entity concept
C)equity concept
D)none of the above

Question

Quizplus · Accepted Answer

The full goodwill method is in accordance with the entity concept of consolidation. This concept assumes that the parent company and its subsidiary are two separate legal entities, and therefore, their financial statements should be consolidated to reflect the economic reality of the group as a whole. The full goodwill method takes into account the fair value of all the identifiable assets and liabilities of the subsidiary, including any intangible assets that may not be separately identifiable without including goodwill. The concept of proprietary consolidation considers only the parent company's share of the subsidiary's identifiable net assets, while the equity method looks at the parent's share of the subsidiary's profits only.

The Full Goodwill Method Is in Accordance with Which Concept