Consolidation of Statements: In today’s world of business acquisition of smaller companies is common and such acquisitions helps in the growth of the parent company. Once a company acquires another company the net assets of the other company is recorded in the books of the parent company. Consolidation of financial statements of both the parent company and subsidiary company is important for the stockholders of the parent company. A parent company may choose any of the two basic methods for consolidation and they are the equity method or cost method. The accounting methods used by a parent company for consolidation is purely based on their convenience. To analyse : The components of non-controlling interest on consolidated trial balance of the parent company and 80% owned subsidiary and how it is displayed in the consolidated balance sheet.

Question

Want to see the full answer?

Answer 1

Question

Chapter 3, Problem 6UTI

To determine

Concept Introduction:

Consolidation of Statements:

In today’s world of business acquisition of smaller companies is common and such acquisitions helps in the growth of the parent company. Once a company acquires another company the net assets of the other company is recorded in the books of the parent company. Consolidation of financial statements of both the parent company and subsidiary company is important for the stockholders of the parent company. A parent company may choose any of the two basic methods for consolidation and they are the equity method or cost method. The accounting methods used by a parent company for consolidation is purely based on their convenience.

To analyse: The components of non-controlling interest on consolidated trial balance of the parent company and 80% owned subsidiary and how it is displayed in the consolidated balance sheet.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

What is the answer of following question? (a) Where the parent company does not hold 100 percent equity of the subsidiary company, what portion of theintra-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?

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?

(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