Assume that P acquires controlling interest in S and there is a Differential at the acquisition date. Puses the fully adjusted equitymethod to account for its investment. At year-end, when the parent's Income from S account is eliminated in the consolidationprocess, what replaces this item on the consolidated financial statements?A)The details of S's reported ('book') net income, with S's expenses based on acquisition date book (G/L) values.B) The details of S's 'true/adjusted' net income, with S's expenses based on acquisition date fair values due toamortization of any Differential.C)NCI in Net lIncome.D) The amortization of the acquisition-date excess cost details only.

Step 1 Consolidated Financial Statements is Full Consolidation and all the shareholding attributes…

Assume that P acquires controlling interest in S and there is a Differential at the acquisition date. P uses the fully adjusted equity method to account for its investment. At year-end, when the parent's Income from S account is eliminated in the consolidation process, what replaces this item on the consolidated financial statements?

Assume that P acquires controlling interest in S and there is a Differential at the acquisition date. P uses the fully adjusted equity method to account for its investment. At year-end, when the parent's Income from S account is eliminated in the consolidation process, what replaces this item on the consolidated financial statements?

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter8: Consolidated Tax Returns

Section: Chapter Questions

Problem 19DQ

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When the parent's Investment in S account is eliminated in the consolidation process, what replaces this item on the consolidated financial statements? A) The acquisition-date fair values of S's net assets, adjusted for any post-acquisition amortization of Differential. B) The acquisition-date book values of S's net assets, adjusted for any post-acquisition amortization of Differential. C) The book value of S's net assets and S's beginning retained earnings only. D) Only the new goodwill generated from the transaction.
You are required to prepare the consolidated statement of financial position as at 31 December x7. Assume: i. Non-controlling interest is measured based on the net assets of the investee on the acquisition date. il. Non-controlling interest is measured based on its fair value.
Which of the following statements regarding the acquisition method of accounting for business combinations is/are correct? (i) It is applied only when the acquirer purchases 100% of the share capital of the acquiree (ii) It requires calculating goodwill (iii) It is applied at every balance sheet date subsequent to the date of acquisition
Company Y purchases a controlling interest in Company Z on January 1, 2019. Which of thefollowing would appear as the Shareholders' Equity amount on Company Y's ConsolidatedBalance Sheet on the date of acquisition?A. Company Y's Shareholders' Equity.B. The sum of the Shareholders' Equity of both companies.C. Company Y's Shareholders' Equity as well as Company Y's proportional share ofCompany Z's net assets at book value.D. Company Y's Shareholders' Equity as well as Company Y's proportional share ofCompany Z's net assets at fair market value.
An entity acquired a 30% interest in another entity in Year I. In Year 2, it acquired another 50% equity interest in the same entity. Which of the following statements is valid?I. The entity's per-existing 30% equity interest should be remeasured at fair value at the acquisition date.Il. The entity's net assets should be remeasured at fair value at acquisition date. a. II only b. Neither I nor II c. Both I and II d. I only
Peer Company acquired of the common stock of Sight Company on January 1, year one, for On that date, Sight had the following trial balance: account debit Additional paid in capital Building (12-year life) Common stock Current assets Equipment (6-yr life) Land Liabilities (due in 4 years) Retained earnings 1/year 1 Totals $250,000 170,000 160,000 110,000 $690,000 During year one, Sight reported net income of During year two, Sight reported net income of During year one, Sight paid dividends of During year two, Sight paid dividends of Building Equipment credit $100,000 170,000 300,000 120,000 $690,000 On January 1, year one, fair values of some Sight's accounts were: Land $122,000 $274,000 $196,000 There was no impairment of any goodwill arising from the acquisition. Peer uses the equity method for this investment. Part A. Use the data for the Peer Company acquisition of the Sight Company to prepare the consolidation journal entries (such as entry S, A,....) for December 31 of year one.…
Prepare consolidation worksheet entries for December 31, 2021 -Prepare entry S to eliminate stockholders' equity accounts of subsidiary for 2021. Prepare entry A to recognize allocations attributed to specific accounts at acquisition date for 2021. Prepare entry I to eliminate the income accrual for 2021 less the amortization recorded by the parent using the equity method. Prepare entry D to eliminate intra-entity dividend transfers. Prepare entry E to recognize current year amortization expense.
Which of the following is true regarding consolidation of net income?A. Parent net income is decreased by the dividend income recognized due to declared bysubsidiary at full amount even if less than 100% ownership is acquired.B. Amortization of excess must be done to adjust net income of parent to arrive at parent netincome own operation.C. Adjusted net income of subsidiary is shared by Parent’s holding interest andnoncontrolling interest.D. Dividend declared by subsidiary is shared by Parent’s holding interest and noncontrollinginterest.
Choose the correct. A parent buys 32 percent of a subsidiary in one year and then buys an additional 40 percent in the next year. In a step acquisition of this type, the original 32 percent acquisition should bea. Maintained at its initial value.b. Adjusted to its equity method balance at the date of the second acquisition.c. Adjusted to fair value at the date of the second acquisition with a resulting gain or loss recorded.d. Adjusted to fair value at the date of the second acquisition with a resulting adjustment to additional paid-in capital.
TRUE OR FALSE: Indicate whether the statements are true or false. 1. Assuming the parent acquired 100 percent of the subsidiary’s stock and there are no purchase differentials, the investment income recorded by the parent in the current period will equal the subsidiary’s current net income recognized subsequent to the acquisition date. 2.
Which of the following statements about post-acquisition earnings is incorrect? А. They are the earnings produced subsequent to the acquisition date by members of the group. В. They form part of earnings of the economic entity. С. They are eliminated against the parent's earnings, in a similar fashion to pre- acquisition earnings. D. They form part of earnings of the economic entity and they are eliminated against the parent's earnings, in a similar fashion to pre-acquisition earnings.
One company purchases the outstanding debt instruments of an affiliated company on the open market. This transaction creates a gain that is appropriately recognized in the consolidated financial statements of that year. Thereafter, a worksheet adjustment is required to correct the beginning balance of consolidated Retained Earnings (or the parent’s Investment in Subsidiary account when the equity method is employed). Why is the amount of this adjustment reduced from year to year?