Question

1. Which account balance is always reported at the same amount on the parent's balance sheet and on the consolidated balance sheet of the parent and its subsidiary at the date of acquisition? A. Goodwill B. Identifiable intangible assets C. Inventories D. Retained earnings

Answer 1

Answer:

A. Goodwill.

Explanation:

Goodwill is the intangible asset of company which arise when a company acquires another company and pays consideration more than the fair value of its net assets. The additional amount given as a consideration is referred to as Goodwill. The goodwill is reported at the amount measured at the acquisition date. The value of goodwill measure at acquisition is reported in Parents balance sheet and consolidated balance sheet of the parents and subsidiary.

Answer 2

Answer:

The correct answer is letter "A": Goodwill.

Explanation:

Goodwill refers to the value of an intangible asset found on the Balance Sheet of a company. The brand recognition, intellectual property, and reputation of a company among its customers and employees can all count towards the goodwill.

When a company is acquired for a price higher than its book value, the target company's surplus is reported as goodwill in its Balance Sheet. The acquiring company records the excess value in its Balance Sheet as well on the date of acquisition.