All supporters of the economic unit concept believe that the entire goodwill

associated with the subsidiary (regardless of the percentage ownership)

should be recognized on the consolidated balance sheet. - T

Consolidated financial statements are prepared for a parent company and

all subsidiaries under control of the parent company. - T

When consolidating multiple financial statements, worksheet eliminations

are never posted to the retained earnings account in the balance sheet. - F

Bargain purchase gain exists when the price pair to acquire a subsidiary is
less than the net appraised market value of the identifiable assets and
liabilities. - T

When less than 100 percent of a subsidiary’s stock is acquired during the
period, the peso amount of preacquisition earnings recognized on the
acquisition date consolidated income statement is the parent company’s
ownership interest in the subsidiary’s net income at the acquisition date. - F

At the date of acquisition, purchase differentials can only be assigned to

tangible assets. - F

The purchase differential that exists at the date a subsidiary is acquired is

allocated to all assets in equal amounts. - F

The subsidiary’s owners’ equity accounts are eliminating when preparing

consolidated financial statements because the consolidated statements are
prepared for the parent company stockholders and the parent’s net worth is
equal to the parent’s net assets, including the Investment in Subsidiary. - T

The parent company often pays an acquisition price equal to the subsidiary
corporation’s book value. - F

The noncontrolling interest has a voice in management of the parent

company because the parent company controls the subsidiary - T

Push-down accounting is required to be applied any time a subsidiary is

acquired. - T
Consolidated financial statements allow the user to see more detailed
information than does the parent company financial statements under the
equity method. - F

Worksheet eliminations are not posted to the financial records of the

subsidiary or the parent - T

The reason the parent’s Investment in Subsidiary account is eliminated

when preparing a consolidation worksheet is that no one cares what the
parent paid for the subsidiary’s stock - F

Individual accounts on the consolidated balance sheet at the date of

acquisition always reflects the parent’s book value plus the subsidiary’s
book value. - F