Using the acquisition method for a business combination, goodwill is generally calculated as the:
A) Cost of the investment less the subsidiary's book value at the beginning of the year.
B) Cost of the investment less the subsidiary's book value at the acquisition date.
C) Cost of the investment less the subsidiary's fair value at the beginning of the year.
D) Cost of the investment less the subsidiary's fair value at acquisition date.
E) Zero, it is no longer allowed under federal law.

Question

Quizplus · Accepted Answer

Goodwill is calculated as the cost of the investment minus the fair value of the identifiable net assets of the subsidiary at the acquisition date.

Using the Acquisition Method for a Business Combination, Goodwill Is