A parent acquires its subsidiary on January 1, 2019, at a cost thatexceeds the subsidiary's book value
Question:
A parent acquires its subsidiary on January 1, 2019, at a cost thatexceeds the subsidiary's book value by $10,000. The subsidiary's assets and liabilities are reported at amounts approximating book value, and there are no previously unreported assets or liabilities. Goodwill from the acquisition is impaired by $300 in 2019 and $100 in 2020. The subsidiary reports net income of $4,500 in 2019 and $3,200 in 2020. The subsidiary has no other comprehensive income and declares no dividends during 2019 or 2020.
On the consolidation working paper at December 31, 2020, eliminating entry (A) includes a debit to the investment in subsidiary account in the amount of:
A. $4,500
B. $7,700
C. $7,300
D. $4,200
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield