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a. Identify and explain the reasons why total purchase price paid in acquiring a subsidiary company is rarely equal to its total net assets/equity as
a. Identify and explain the reasons why total purchase price paid in acquiring a subsidiary company is rarely equal to its total net assets/equity as reported in its audited financial statements. (32 marks)
You may include the following in your discussion:
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- Financial statement line items of assets/liabilities that would/would not usually give rise to the difference and the reasons thereon.
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- Any other reasons.
b. Illustrate the accounting concepts that deal with the difference in the purchase price and total net assets/equity of the subsidiary acquired in the preparation and presentation of consolidated financial statements. (8 marks)
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