Noncontrolling interest, as it appears in a consolidated balance sheet, refers to: Owners of less than 50 percent of the parent company’s stock Parent’s interest in subsidiary companies Interest expense on subsidiary’s bonds payable Equity in the subsidiary’s net assets held by stockholders other than the parent

Noncontrolling interest, as it appears in a consolidated balance sheet, refers to: Owners of less than 50 percent of the parent company’s stock Parent’s interest in subsidiary companies Interest expense on subsidiary’s bonds payable Equity in the subsidiary’s net assets held by stockholders other than the parent

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 15MCQ

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Parent-company and consolidated financial statement amounts would not be the same for: Capital stock Retained earnings Investments in unconsolidated subsidiaries Investments in consolidated subsidiaries Noncontrolling interest, as it appears in a consolidated balance sheet, refers to: Owners of less than 50 percent of the parent company’s stock Parent’s interest in subsidiary companies Interest expense on subsidiary’s bonds payable Equity in the subsidiary’s net assets held by stockholders other than the parent Pam Corporation acquired an 80 percent interest in Sun Corporation on January 1, 2016, and issued consolidated financial statements at and for the year ended December 31, 2016. Pam and Sun had issued separate-company financial statements in 2015. The change in reporting entity is reported by restating the financial statements of all prior periods presented as consolidated statements. The cumulative effect of the change in reporting entity is…
Explain what effect does the dividend have on the retained earnings and non-controlling interest balances in the parent company’s consolidated balance sheet if a 70 percent owned subsidiary company declares and pays a cash dividend.
A subsidiary owns shares of its parent company. Which of the following is true concerning the treasury stock approach?a. It is one of several options to account for mutual holdings available under current accounting standards.b. The original cost of the subsidiary’s investment is a reduction in consolidated stockholders’ equity.c. The subsidiary accrues income on its investment by using the equity method.d. The treasury stock approach eliminates these shares entirely within the consolidation process.
In a business combination - stock acquisition, difference between current fair values and book values of subsidiary’s identifiable assets and liabilities on acquisition date is: [a] Accounted for in the parent company’s books [b] Accounted for in the subsidiary’s books [c] not accounted in the books but is accounted for in the preparation of consolidated financial statements [d] totally disregarded
How is the portion of consolidated earnings to be assigned to the non-controlling interest in consolidated financial statements determined?A. The amount of the subsidiary’s earnings recognized for consolidation purposes is multiplied by the non-controlling interest percentage on the balance sheet date.B. The amount of consolidated earnings on the consolidated work papers is multiplied by the non-controlling interest percentage on the balance sheet date.C. The subsidiary’s net income is extended to the non-controlling interestD. The parent’s net income is subtracted from the subsidiary’s net income to determine the non-controlling interest.
In consolidated financial statements, it is expected that: A. Retained earnings equals to the sum of controlling interest separate retained earnings and non-controlling interest separate retained earnings. B. Ordinary share equals to the sum of parent’s ordinary share and subsidiary’s ordinary share. C. Net income equals to the sum of the income distributed to the controlling interest and distributed to non-controlling interest. D. Dividends declared equals the sum of the total parent company’s declared dividends and the total subsidiary’s declared dividends.
Under the equity method of accounting for the operating results of a subsidiary, the dividends declared by the subsidiary to the parent company are accounted for by the parent company as A. Dividend revenue on the declaration date. B. A reduction of the Investment in Subsidiary account on the payment date. C. Dividend revenue on the payment date. D. A reduction of the Investment in Subsidiary account on the declaration date.
When a parent company acquires a less-than-100 percent controlling interest in a subsidiary, what portion of that subsidiary’s financial data does the parent consolidate?
If a parent company has controlling interest in a subsidiary which has no potentially dilutive securities outstanding, then in the calculation of consolidated diluted EPS, it will be necessary to Select one: a. only make an adjustment of subsidiary's basic earnings. b. replace the parent's equity in subsidiary earnings with the parent's equity in subsidiary's diluted EPS. c. make a replacement calculation in the parent's basic earnings for the EPS. d. only use the parent's common shares and shares represented by the parent's potentially dilutive securities.
Dividends declared by a subsidiary subsequent to the date of a business combination are displayed in a consolidated statement of retained earnings True False
A partially owned subsidiary declared dividend and half remains unpaid by the end of the year, which of the following is CORRECT? A. The total amount of the dividend will be eliminated in the working paper elimination entry by debiting “dividend” account. B. Half of the amount of the dividend will be used to reduce the profit of the parent for consolidation purposes. C. The elimination entry will include a debit to non-controlling interest for the amount of dividend received by the non-controlling shareholders. D. The transaction will increase the balance of NCI at the end.
How should preferred stock of a subsidiary be shown in a consolidated balance sheet in each case? a. If it is held 100 percent by the parent. b. If it is held 50 percent by the parent and 50 percent by outside interests c. If it is held 100 percent by outside interests.