Under AS 21, excess of the cost of a parent’s investment in a subsidiary over its share of the…
The excess is recognised as goodwill in the consolidated financial statements. The comparison is between the investment’s cost and the parent’s share of the subsidiary’s…
Choose your answer
Under AS 21, excess of the cost of a parent’s investment in a subsidiary over its share of the subsidiary’s equity at the acquisition date is considered as:
Answer and explanation
Correct answer C
The excess is recognised as goodwill in the consolidated financial statements. The comparison is between the investment’s cost and the parent’s share of the subsidiary’s equity at acquisition; an excess in the opposite direction gives rise to a capital reserve.
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Himachal Pradesh SET (HP SET)