Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 36

A parent buys 32 percent of a subsidiary in one year and then buys an additional 40 percent in the next year.In a Step acquisition of this type, the original 32 percent acquisition should be
a.Maintained at its Initial value.
b.Adjusted to its equity method balance at the date of the second acquisition.
c.Adjusted to fair value at the date of the second acquisition with a resulting gain or loss recorded.
d. Adjusted to fair value at the date of the second acquisition with a resulting adjustment to additional paid-in capital.