The parent company acquires all of a subsidiary’s common stock but only 70 percent of its preferred shares. This preferred stock pays a 7 percent annual cumulative dividend. No dividends are in arrears at the current time. How is the noncontrolling interest’s share of the subsidiary’s income computed? As 30 percent of the subsidiary’s preferred dividend. No allocation is made because the dividends have been paid. As 30 percent of the subsidiary’s income after all dividends have been subtracted. Income is assigned to the preferred stock based on total par value and 30 percent of that amount is allocated to the noncontrolling interest.
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- The parent company acquires all of a subsidiary’s common stock but only 70 percent of its
preferred shares. This preferred stock pays a 7 percent annual cumulative dividend. No dividends are in arrears at the current time. How is the noncontrolling interest’s share of the subsidiary’s income computed? - As 30 percent of the subsidiary’s preferred dividend.
- No allocation is made because the dividends have been paid.
- As 30 percent of the subsidiary’s income after all dividends have been subtracted.
Income is assigned to the preferred stock based on total par value and 30 percent of that amount is allocated to the noncontrolling interest.
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- On January 1, Stanton Company buys 10 percent of the outstanding shares of its parent, ProMart, Inc. Although the total book and fair values of ProMart's net assets equaled $4 million, the price paid for these shares was $420,000. During the year, ProMart reported $510,000 of separate operating income (no subsidiary income was included) and declared dividends of $140,000. How are the shares of the parent owned by the subsidiary reported at December 31? Please dont give solution image basedChoose the correct. The parent company acquires all of a subsidiary’s common stock but only 70 percent of its preferred shares. This preferred stock pays a 7 percent annual cumulative dividend. No dividends are in arrears at the current time. How is the noncontrolling interest’s share of the subsidiary’s income computed?a. As 30 percent of the subsidiary’s preferred dividend.b. No allocation is made because the dividends have been paid.c. As 30 percent of the subsidiary’s income after all dividends have been subtracted.d. Income is assigned to the preferred stock based on total par value and 30 percent of that amount is allocated to the noncontrolling interest.On January 1, Balanger Company buys 10 percent of the outstanding shares of its parent, Altgeld, Inc. Although the total book and fair values of Altgeld’s net assets equaled $3.2 million, the price paid for these shares was $340,000. During the year, Altgeld reported $415,000 of separate operating income (no subsidiary income was included) and declared dividends of $35,000. How are the shares of the parent owned by the subsidiary reported at December 31?a. Consolidated stockholders’ equity is reduced by $340,000.b. An investment balance of $378,000 is eliminated for consolidation purposes.c. Consolidated stockholders’ equity is reduced by $378,000.d. An investment balance of $358,000 is eliminated for consolidation purposes.
- Choose the correct. On January 1, Balanger Company buys 10 percent of the outstanding shares of its parent, Altgeld, Inc. Although the total book and fair values of Altgeld’s net assets equaled $3.2 million, the price paid for these shares was $340,000. During the year, Altgeld reported $415,000 of separate operating income (no subsidiary income was included) and declared dividends of $35,000. How are the shares of the parent owned by the subsidiary reported at December 31?a. Consolidated stockholders’ equity is reduced by $340,000.b. An investment balance of $378,000 is eliminated for consolidation purposes.c. Consolidated stockholders’ equity is reduced by $378,000.d. An investment balance of $358,000 is eliminated for consolidation purposes.PARENT Corporation acquired 80% of the outstanding shares of SUBSIDIARY Company on June 1, 2022 for P3,517,500. SUBSIDIARY Company’s stockholder’s equity components at the end of this year are as follows; Ordinary shares, P100 par, P1,500,000. Share premium P675,000 and Retained Earnings P1,335,000. Non-controlling interest is measured at fair value and the fair value is P705,000. The assets of SUBSIDIARY were fairly valued, except for inventories, which are overstated by P66,000 and equipment, which was understated by P90,000. Remaining useful life of equipment is 4 years. Stockholder’s equity of PARENT on January 1, 2022 is composed of Ordinary shares P4,500,000, Share premium P1,050,000, Retained Earnings P3,150,000. Goodwill, if any, should be written down by P85,350 at year-end. Net Income for the first year of parent is P450,000 and the net income of subsidiary from the date of acquisition is P255,000. Dividends declared at the end of the year amounted to P120,000 and P90,000 for…Parent Corporation owns 75% of Subsidiary Corporations voting rights and loses control ofSubsdiarys by selling the 40% of Subsidiarys shares for P400,000. The book value of the remainingInvestment after the sale is P300,000 while its fair value at the date of loss of control is P335,000. Atthe time of the sale, the carrying amount of the Non-controlling interest is P220,000 and the book valueof the Subsidiarys net assets is P870,000. How shall the parent account for the loss of control?a. The parent shall derecognize in its consolidated financial statements the assets, liabilities andgoodwill of the subsidiary, NCI, at their carrying amount on the date when control is lost.b. The parent shall also recognize gain/(loss) on deconsolidation of P85,000 in profit or loss bycomparing the aggregate of (1) Proceeds of sale P400,000; (2) Fair value of Retained Investment P335,000; and (3) Carrying amount of NCI at the time of sale P220,000 with the carrying amount ofSubsidiarys net assets at…
- Parent Corporation acquired 80% of the outstanding shares of Subsidiary Company on June 1, 2021 for P3,517,500. Subsidiary Company’s stockholder’s equity components at the end of this year are as follows: Ordinary shares, P100 par, P1,500,000, Share premium P675,000 and Retained Earnings P1,335,000. Non-controlling interest is measured at fair value and the fair value is P705,000. The assets of Subsidiary Company were fairly valued, except for inventories, which are overstated by P66,000, and equipment, which was understated by P90,000. Remaining useful life of equipment is 4 years. Stockholder’s equity of Parent Corporation on January 1, 2021 is composed of Ordinary shares P4,500,000, Share premium P1,050,000, Retained Earnings P3,150,000. Goodwill, if any, should be written down by P85,350 at year end. Net Income for the first year of parent is P450,000 and the net income of Subsidiary Company from the date of acquisition is P255,000. Dividends declared at the end of the year…Arryn, Inc., owns 95 percent of Stark Corporation’s voting stock. The acquisition price exceeded book and fair value by $85,500 which was appropriately attributed to goodwill. Stark holds 15 percent of Arryn’s voting stock. The price paid for the shares by Stark equaled 15 percent of the parent’s book value and the net fair values of its assets and liabilities. During the current year, Arryn reported separate operating income of $228,000 and dividend income from Stark of $52,500. At the same time, Stark reported separate operating income of $78,000 and dividend income from Arryn of $18,000.What is the net income attributable to the noncontrolling interest under the treasury stock approach?a. $4,800b. $2,700c. $24,600d. $26,700APA Corporation is a parent, having purchased 60% of ABC Company’s common stock at par value for P600,000. ABC Company is in financial difficulty. The parent granted an unsecured loan of P200,000 to the subsidiary. An accounting estimate of affairs for ABC Company shows a dividend of 30%. APA Corporation can expect to receive payment for its Investment in ABC Company of approximately
- Mattoon, Inc., owns 80 percent of Effingham Company. For the current year, this combined entity reported consolidated net income of $500,000. Of this amount $465,000 was attributable to Mattoon’s controlling interest while the remaining $35,000 was attributable to the noncontrolling interest. Mattoon has 100,000 shares of common stock outstanding and Effingham has 25,000 shares outstanding.Neither company has issued preferred shares or has any convertible securities outstanding. On the face of the consolidated income statement, how much should be reported as Mattoon’s earnings per share?a. $5.00b. $4.65c. $4.00d. $3.88Hepner Corporation has the following stockholders’ equity accounts:The preferred stock is participating. Wasatch Corporation buys 80 percent of this common stock for $1,600,000 and 70 percent of the preferred stock for $630,000. The acquisition-date fair value of the noncontrolling interest in the common shares was $400,000 and was $270,000 for the preferred shares. All of the subsidiary’s assets and liabilities are viewed as having fair values equal to their book values. What amount is attributed to goodwill on the date of acquisition?arent Corporation issued on March 31, 2021 500,000 shares of its P10 par ordinary shares, P40 market value per share, to acquire all of the outstanding P25 par value ordinary share of Subsidiary A Company and 100,000 shares of the same P10 par ordinary shares of all the outstanding P55 par value ordinary shares of Subsidiary B Company. On this date the fair values of Subsidiary A Company’s assets and liabilities equaled their book values, except for its long-term investment in marketable equity securities for which the aggregate market value exceeded cost by P500,000. The fair values of Subsidiary B Company’s assets and liabilities equaled their book values except for the property plant and equipment which is P800,000 less than the carrying values and inventories which is P100,000 more than the carrying value. On March 31, 2021, immediately before the combination, the stockholders’ equities were: Subsidiary A Company Subsidiary B Company Ordinary Shares 5,500,000…