Acquisition Method

Question 1

a subsidiary is acquired with an acquisition cost that is less than the fair value of the underlying assets

Answer 1

When a subsidiary is acquired with an acquisition cost that is less than the fair value of the underlying assets, the following steps are required:

• The balance sheet is adjusted to fair value, which creates a negative balance in the acquisition account.
• Identifiable intangible assets are recognized at fair value, which increases the negative balance in the acquisition account.
• The total negative balance in the acquisition account is recorded as a gain.

Question 2

U.S. GAAP, noncontrolling interest (NCI)

Answer 2

NCI = Fair value of subsidiary × NCI %

Question 3

IFRS partial goodwill method

Answer 3

Goodwill = Acquisition cost - Fair value of subsidiary’s net assets acquired

Question 4

IFRS noncontrolling interest (NCI)

Answer 4

NCI = FV of subsidiary net assets × NCI %