When a subsidiary pays less than book value to acquire the minority interest, the parent's total dollar interest in the subsidiary's net assets at their book value is increased.

Question

Quizplus · Accepted Answer

When a subsidiary pays less than book value to acquire the minority interest, it means the acquisition cost is lower than the proportionate share of the subsidiary's net assets. This results in an increase in the parent's total dollar interest in the subsidiary's net assets at their book value, as the parent effectively gains a larger share of the net assets without an increase in the reported book value of those assets.

When a Subsidiary Pays Less Than Book Value to Acquire