Any goodwill on the subsidiary company's books on the date of acquisition:

Multiple Choice

• must be revalued.

• must be eliminated in preparing consolidated financial statements.

• must be recorded as a loss on acquisition.

• must be subject to an impairment test.

A negative acquisition differential:

Multiple Choice

• is always equal to negative goodwill.

• occurs when the fair value of the subsidiary's net assets are less than their carrying amounts.

• implies that the parent company may have overpaid for its acquisition.

• cannot occur under the acquisition method.