Reasons a Parent Company May Pay More Than Book Value

Multiple Choice

Reasons a parent company may pay more than book value for the subsidiary company's stock include all of the following EXCEPT:

A) the fair value of one of the subsidiary's assets may exceed its recorded value because of appreciation.
B) the existence of unrecorded goodwill.
C) liabilities may be overvalued.
D) stockholders' equity may be undervalued.