What is the primarydifference between: (i) accounting for a business combination when the subsidiary is dissolved; and (ii) accounting for a business combinatio

A) If the subsidiary is dissolved, it will not be operated as a separate division.

B) If the subsidiary is dissolved, assets and liabilities are consolidated at their book values.

C) If the subsidiary retains its incorporation, there will be no goodwill associated with the acquisition.

D) If the subsidiary retains its incorporation, assets and liabilities are consolidated at their book values.

E) If the subsidiary retains its incorporation, the consolidation is not formally recorded in the accounting records of the acquiring company.

Answer: E

Learning Objective: 02-03

Learning Objective: 02-06a 

Learning Objective: 02-06c

Topic: Business combination―Differentiate across forms

Topic: Journal entry―Dissolution

Topic: Journal entry―Investment with no dissolution

Difficulty: 2 Medium  

Blooms: Understand

AACSB: Reflective Thinking

AICPA: BB Critical Thinking

AICPA: FN Measurement