Under the single-date method goodwill would be recognised:
A) at the point in time when the parent entity ultimately gains control of the subsidiary.
B) at the time when each additional acquisition of shares is made.
C) as part of equity in the parent's books.
D) at the point in time when the subsidiary shareholders acknowledge that they will sell their shareholdings to the parent entity.

Question

Quizplus · Accepted Answer

Under the single-date method, goodwill is recognised at the point in time when the parent entity ultimately gains control of the subsidiary. This is because the single-date method assumes that the parent acquires control of the subsidiary on a specific date, and therefore, it is at this point in time that the goodwill arises. Goodwill is calculated as the excess of the cost of acquisition over the fair value of the identifiable net assets acquired.

Under the Single-Date Method Goodwill Would Be Recognised