When an existing company creates a new subsidiary and transfers a portion of its assets and liabilities

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When an existing company creates a new subsidiary and transfers a portion of its assets and liabilities to the new entity

a. The new entity records both the assets and liabilities it received at fair values.

b. The new entity records both the assets and liabilities it received at the carrying values of the original company.

c. The original company records a gain or loss on the difference between its carrying values and the fair values of the assets transferred to the new entity.

d. The original company records the difference between the carrying values and the fair values of the assets transferred to the new entity as goodwill.

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Advanced Financial Accounting

ISBN: 9781260165111

12th Edition

Authors: Theodore Christensen, David Cottrell, Cassy Budd

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