SWFT Corp Partner Estates Trusts
42nd Edition
ISBN: 9780357161548
Author: Raabe
Publisher: Cengage
expand_more
expand_more
format_list_bulleted
Question
error_outline
This textbook solution is under construction.
Students have asked these similar questions
Following the completion of a business combination in the form of a statutory consolidation, what is the balance in the new corporation’s Retained earnings account?
A. The sum of the acquirer and acquiree retained earnings account balances.
B. The acquirer retained earnings account balance
C. Zero
D. The acquiree retained earnings account balance
Which of the following statements is correct with respect to the § 338 election?
a. The parent recognizes no gain (loss) as a result of the election.
b. The subsidiary corporation makes the § 338 election.
c. A qualified stock purchase occurs when a corporation acquires in a taxable transaction at least 80% of the stock (voting power and value) of another corporation within an 18-month period.
d. Gain but not loss is recognized by the subsidiary as a result of a deemed sale of its assets.
1- In a business combination resulting in a parent-subsidiary relationship, the identifiable net assets of the subsidiary must be reflected in the consolidated balance sheet at their current values on the date of the business combination. Does this require the subsidiary to enter the current fair values of the identifiable net assets in its accounting records? Explain.
2- The controller of Ahmed Corporation, which has just become the parent of Hassan Company in a business combination, inquires if a consolidated income statement is required for the year ended on the date of the business combination. What is your reply? Explain
Knowledge Booster
Learn more about
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
- S1: In a working paper elimination (in journal entry format) for the consolidated balance sheet of a parent company and its wholly owned subsidiary on the date of a business combination, the subtotal of the credits to the subsidiary’s stockholders’ equity accounts equals the current fair value of the subsidiary’s identifiable net assets. S2: In a completed working paper elimination (in journal entry format) for a parent company and its wholly owned subsidiary on the date of business combination, the total of the credits generally equals the parent company’s total cost of its investment in the subsidiary. Only S1 is correct Only S2 is correct Both statements are correct Both statements are incorrectarrow_forwardChoose 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_forwardWhich of the following must be possible in order for a business combination to exist? A. Ownership of 100 % of a subsidiary's voting shares B. Control of a subsidiary's net assets that constitute a business C. Ownership of all of a subsidiary's assetsD. Ownership of all of a subsidiary's operating assetsarrow_forward
- Given the following information, how is goodwill from a business combination computed under PFRS (IFRS) 3? A = Consideration transferred; B = Non-controlling interest in net assets of subsidiary; C = Previously held equity interest; D = Fair value of net identifiable assets of subsidiary; % = Percentage of ownership acquired by the parent in the subsidiary a. A – (D x %) b. A+B+C-D c. (A+C) – (D x %) d. (A+B) – [(D x %) – B]arrow_forwardPLEASE ANSSWER ASAP. WILL DO THUMBS UP. 1. Assuming the Parent entity elects to measure the NCI at proportionate basis, the computation of non- controlling interest in net income of subsidiary is reduced by the following, except: O Amortization of undervalued assets O All of the above O Amortization of overvalued liabilities O Impairment loss of goodwill 2. Which of the following statements is correct? Statement 1: Any unrealized profit or loss made by the subsidiary should be eliminated from its profit. Statement 2: only the group portion of any unrealized profit need to be eliminated. a. both I and II b. I c. Neither 1 or 2 d. IIarrow_forwardDescribe the requirement of MFRS 3 Business Combination in relation tothe revaluation of a subsidiary company's assets to fair value at theacquisition date. Give explanation base on MFRS 3 with examplearrow_forward
- Which of the following is not typical of the journal entries prepared by a parentcompany to account for its subsidiary’s operations under the cost method ofaccounting A. A credit to the intercompany dividend income account B. Deprecation and amortization of differences between current fair values and book values of the subsidiary’s identifiable net assets on the date of the acquisition. C. None of the foregoing. D. Accrual of the parent company’s share of the subsidiary’s net income or lossarrow_forwardIn 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 disregardedarrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
What is liquidity?; Author: The Finance Storyteller;https://www.youtube.com/watch?v=XtjS7CfUSsA;License: Standard Youtube License