Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 5, Problem 5.11Q
Under what Circumstances would a parent company cease consolidation of a subsidiary? Explain.
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Where are only a proportion of a subsidiary's shares owned by a parent entity? What proportion of the intragroup transactions between the parent entity and the subsidiary will need to be eliminated on consolidation?
How is the goodwill appearing on the statement of the financial position for a subsidiary prior to a business combination treated in the subsequent preparation of consolidated statements?
What is a basic premise of the acquisition method regarding accounting for a noncontrolling interest?a. Consolidated financial statements should be primarily for the benefit of the parent company’s stockholders.b. Consolidated financial statements should be produced only if both the parent and the subsidiary are in the same basic industry.c. A subsidiary is an indivisible part of a business combination and should be included in its entirety regardless of the degree of ownership.d. Consolidated financial statements should not report a noncontrolling interest balance because these outside owners do not hold stock in the parent company.
Chapter 5 Solutions
Advanced Financial Accounting
Ch. 5 - Where is the balance assigned to the...Ch. 5 - Why must a noncontrolling interest be reported in...Ch. 5 - Prob. 5.3QCh. 5 - Prob. 5.4QCh. 5 - Prob. 5.5QCh. 5 - Prob. 5.6QCh. 5 - Prob. 5.7QCh. 5 - Prob. 5.8QCh. 5 - Prob. 5.9QCh. 5 - Prob. 5.10Q
Ch. 5 - Under what Circumstances would a parent company...Ch. 5 - Prob. 5.12QCh. 5 - Prob. 5.13QCh. 5 - Prob. 5.14AQCh. 5 - Prob. 5.15AQCh. 5 - Consolidation Worksheet Preparation The newest...Ch. 5 - Prob. 5.2CCh. 5 - Prob. 5.3CCh. 5 - Prob. 5.4CCh. 5 - Prob. 5.5CCh. 5 - Prob. 5.1.1ECh. 5 - Prob. 5.1.2ECh. 5 - Prob. 5.1.3ECh. 5 - Prob. 5.1.4ECh. 5 - Prob. 5.2.1ECh. 5 - Prob. 5.2.2ECh. 5 - Prob. 5.2.3ECh. 5 - Prob. 5.2.4ECh. 5 - Prob. 5.2.5ECh. 5 - Prob. 5.3ECh. 5 - Prob. 5.4ECh. 5 - Balance Sheet Worksheet Problem Company owns 90...Ch. 5 - Prob. 5.6ECh. 5 - Prob. 5.7ECh. 5 - Prob. 5.8.1ECh. 5 - Prob. 5.8.2ECh. 5 - Prob. 5.8.3ECh. 5 - Prob. 5.8.4ECh. 5 - Prob. 5.8.5ECh. 5 - Prob. 5.8.6ECh. 5 - Prob. 5.8.7ECh. 5 - Prob. 5.9ECh. 5 - Prob. 5.10ECh. 5 - Prob. 5.11ECh. 5 - Prob. 5.12ECh. 5 - Prob. 5.13ECh. 5 - Prob. 5.14ECh. 5 - Prob. 5.15ECh. 5 - Prob. 5.16ECh. 5 - Prob. 5.17AECh. 5 - Prob. 5.18AECh. 5 - Prob. 5.19PCh. 5 - Prob. 5.20PCh. 5 - Prob. 5.21.1PCh. 5 - Multiple-Choice Questions on Applying the Equity...Ch. 5 - Prob. 5.21.3PCh. 5 - Prob. 5.21.4PCh. 5 - Prob. 5.22PCh. 5 - Computation of Account Balances Pencil Company...Ch. 5 - Prob. 5.24PCh. 5 - Equity Entries with Differential On January 1,...Ch. 5 - Equity Entries with Differential Plug Corporation...Ch. 5 - Prob. 5.27PCh. 5 - Prob. 5.28PCh. 5 - Prob. 5.29P
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Where the parent firm does not own 100% of the subsidiary company, how much of the parent entity's intra-group transactions with the subsidiary entity will need to be deleted during consolidation?arrow_forwardWhich of the following is NOT true with regard to the statutory consolidation form of business combination? a. The combining entities both cease to exist after the combination. b. A new corporation must be formed. c. Control of the net assets of the combining entities must be acquired by the new entity. d. The net assets of the combining entities must be acquired with assets of the new corporation.arrow_forwardHow are rights, warrants, and options of subsidiary companies treated in the computation of consolidated EPS?arrow_forward
- Choose the correct. What is a basic premise of the acquisition method regarding accounting for noncontrolling interest?a. Consolidated financial statements should be primarily for the benefit of the parent company’s stockholders.b. Consolidated financial statements should be produced only if both the parent and the subsidiary are in the same basic industry.c. A subsidiary is an indivisible part of a business combination and should be included in its entirety regardless of the degree of ownership.d. Consolidated financial statements should not report a noncontrolling interest balance because these outside owners do not hold stock in the parent company.arrow_forwardWhat amount of gain or loss does Ernesto recognize if the transaction is structured as a Type A merger?arrow_forwardIn a share acquisition business combination resulting in a parent- subsidiary relationship, the difference between the current fair values and book values of the subsidiary’s identifiable net assets on acquisition date are: Disregarded Entered in the accounting records of the subsidiary Provided in a consolidated statement worksheet elimination. Account for in appropriately titled ledger accounts in the parent company’s accounting recordsarrow_forward
- When we are preparing consolidated financial statements, will the financial statements of the parent entity, or the subsidiary companies, as at the beginning of the financial period reflect prior consolidation adjustments? Why?arrow_forwardFrom a consolidated point of view, the intercompany gain or loss on a parent’s sale of a non-depreciable asset to subsidiary is realized when: a. The parent company sells the asset to the subsidiary b. The subsidiary start to use the asset c. The subsidiary resells the asset to the parent d. The subsidiary resells the asset to the outsiderarrow_forwardWhich of the following intercompany transactions would not require a worksheet elimination in the consolidation process? a. The subsidiary’s payment of rent to its parent. b. The sale of merchandise by a parent to its subsidiary. c. The amount of a loan to the subsidiary made by its parent. d. None of the above.arrow_forward
- According to PFRS 10A. A parent entity is required to consolidate its subsidiaries only for internal reporting purposes.B. A parent entity is required to consolidate its subsidiaries.C. A parent need not consolidate a subsidiary if the subsidiary’s business is different from that of the parent.D. A parent entity is encouraged but not required to consolidate its subsidiaries.arrow_forwardWhen one company buys the assets and liabilities of another company, this is known as which of the following?Choose one answer.a. Limited liability company b. Merger c. Conventional corporation d. Acquisitionarrow_forwardAt the date of acquisition, business combination resulting in a parent-subsidiary relationship, the difference between current fair values and carrying amounts of the subsidiary’s net assets is: Group of answer choices Recorded in the applicable asset and liability accounts of the subsidiary Reflected in a consolidation elimination Ignored and not accounted for Accounted for in some other manner Recorded in the applicable asset and liability accounts of the parentarrow_forward
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