The goal of the consolidation process is for asset acquisitions and 100% stock acquisitions to result in the same balance sheet goodwill to appear on the balance sheet of the consolidated entity the assets of the noncontrolling interest to be predominately displayed on the balance sheet. the investment in the subsidiary to be properly valued on the consolidated balance sheet

The goal of the consolidation process is for asset acquisitions and 100% stock acquisitions to result in the same balance sheet goodwill to appear on the balance sheet of the consolidated entity the assets of the noncontrolling interest to be predominately displayed on the balance sheet. the investment in the subsidiary to be properly valued on the consolidated balance sheet

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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Choose the letter of the correct answer. 1. Which of the following is not correct with regard to a parent’s ownership of 100 percent of a subsidiary’s stock subsequent to a book value acquisition? A. Consolidated Investment in Subsidiary balance equals the parent’s Investment in Subsidiary balance B. Consolidated Retained Earnings equals the parent’s Retained Earnings C. Consolidated dividends equal the parent’s dividends D. Consolidated net income equals the parent’s net income 2. What amount of allocated excess/purchase differential amortization is recognized in the parent’s financial records subsequent to the subsidiary’s acquisition? A. The noncontrolling interest percentage ownership in the subsidiary B. 100 percent of the purchase differential amortization C. Allocated excess/purchase differentials are not amortized D. The parent percentage ownership in the subsidiary
If PROMDI Co., a new company would acquire the net assets of CARDO Co and SYANO Co. PROMDI Co will be issuing 30,000 shares to CARDO and 12,000 shares to SYANO. The following is the balance sheet of PROMDI Co, followed by the fair values and additional unpaid costs incurred by PROMDI in the acquisition: REQUIREMENTS:A. GoodwillB. Consolidated Total Assets at the date of acquisitionC. Consolidated Total Liabilities at the date of acquisitionD. Consolidated Equity at the date of acquisition
Consolidated Worksheet Preparation You will be creating and entering formulas to complete four worksheets. The first objective is to demonstrate the effect of different methods of accounting for the investments (equity, initial value, and partial equity) on the parent company’s trial balance and on the consolidated worksheet subsequent to acquisition. The second objective is to show the effect on consolidated balances and key financial ratios of recognizing a goodwill impairment loss. Project Scenario Pecos Company acquired 100 percent of Suaro’s outstanding stock for $1,450,000 cash on January 1, 2017, when Suaro had the following balance sheet:(THIS IS IN THE PICTURE) Following is the consolidated information worksheet. December 31, 2018, trial balances Pecos Suaro revenues $ (1,052,000) $ (427,000) operating expenses $ 821,000 $ 262,000 goodwill impairment loss ? income of Suaro ? net income ? $…
Statement I: Gain on bargain purchase is included in the consolidated balance of shareholders’ equity at the date of acquisition.Statement II: For business combination for SMEs, all business combination expenses, direct, indirect, and share-issue costs are deducted in the consolidated balance of shareholders’ equity at the date of acquisition. a. False, True b. False, False c. True, True d.True, False
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.
Assume that Company A acquires 70 per cent of Company B for a cash price of $14 million when the share capital and reserves of Company B are: Share capital $8 million Retained earnings $2 million $10 million What amount of goodwill will be shown in the consolidated statement of financial position pursuant to AASB 3 assuming that any non-controlling interest in the acquirer is measured at fair value? Pass the necessary consolidation journal entries and the journal entries to record the non-controlling interest if the non-controlling interest in the acquirer is measured at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.
Choose the correct. A company acquires a subsidiary and will prepare consolidated financial statements for external reporting purposes. For internal reporting purposes, the company has decided to apply the equity method. Why might the company have made this decision?a. It is a relatively easy method to apply.b. Operating results appearing on the parent’s financial records reflect consolidated totals.c. GAAP now requires the use of this particular method for internal reporting purposes.d. Consolidation is not required when the parent uses the equity method.
Where the parent company does not hold 100 percent equity of the subsidiary company, what portion of the intra-group transactions between the parent entity and the subsidiary entity will need to be eliminated on consolidation? What is a non-controlling interest, and how should it be disclosed? How are non-controlling interests affected by intra-group transactions? What are the three steps we use to calculate total non-controlling interest? answer all the points with refrence. This is a full question. Thanks
Which one of the following statements is correct with regards to a 70%-owned subsidiary? 100% of the parent’s retained earnings will be added to 100% of the subsidiary’s retained earnings at consolidation, in the statement of changes in equity. 100% of the parent’s assets will be added to 70% of the subsidiary’s assets at consolidation, in the statement of financial position. 100% of the parent’s retained earnings will be added to 70% of the subsidiary’s retained earnings at consolidation, in the statement of changes in equity. The retained earnings of the subsidiary will be allocated to the non-controlling interests in total.
(a) Where the parent company does not hold 100 percent equity of the subsidiary company, what portion of the intra-group transactions between the parent entity and the subsidiary entity will need to be eliminated on consolidation? (b) What is a non-controlling interest, and how should it be disclosed? (c) How are non-controlling interests affected by intra-group transactions? (d) What are the three steps we use to calculate total non-controlling interest? Show working
Assume that Company A acquires 70 per cent of Company B for a cash price of $14 million when the share capital and reserves of Company B are: Share capital $8 million Retained earnings $2 million $10 million. A)Pass the necessary consolidation journal entries and the journal entries to record the non-controlling interest if the non-controlling interest in the acquirer is measured at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. b) What are some of the implications of allowing the group to have two options in accounting for goodwill on consolidation?
If PROMDI Co., a new company would acquire the net assets of CARDO Co and SYANO Co. PROMDI Co will be issuing 30,000 shares to CARDO and 12,000 shares to SYANO. The following is the balance sheet of PROMDI Co, followed by the fair values and additional unpaid costs incurred by PROMDI in the acquisition: Compute for the Consolidated Equity at the date of acquisition.