Company P owns 90% of Company S’s shares. Assume Company S then purchases 2% of Company P’s outstanding shares of common stock. When consolidating, what happens to the 2% holding in the consolidated financial statements?
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Company P owns 90% of Company S’s shares. Assume Company S then purchases 2% of Company P’s outstanding shares of common stock. When consolidating, what happens to the 2% holding in the consolidated financial statements?
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- Assume that Company A acquires 70 per cent of Company B for a cash price of $14 million when the share capital and reserves of Company B are: Share capital $8 million Retained earnings $2 million $10 million. A)Pass the necessary consolidation journal entries and the journal entries to record the non-controlling interest if the non-controlling interest in the acquirer is measured at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. b) What are some of the implications of allowing the group to have two options in accounting for goodwill on consolidation?Company A owns 40 percent of Company B and exercisessignificant influence over the management of Company B.Therefore, Company A uses what accounting method forreporting its ownership of stock in Company B?a. The consolidation method.b. The fair value method for available-for-sale securities.c. The equity method.d. The fair value method for trading securitiesCompany 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.
- Majan SAOG purchased 25% shares of Teejan SAOG. Majan SAOG also intends to influence and control the affairs of Teejan SAOG business. What accounting method for equity securities should Majan use? a. Fair Value Method b. Cost Method c. Full Consolidation Method d. Equity Method3) ABC Company owns 60% of the stock of XYZ Company and prepares consolidated financial statements. The rationale for preparing consolidated financial statements is the economic entity assumption and comparability. (True/False)1) Peter Inc. acquired 100% of the outstanding Inc. for $ Common Stock of Simran cash and shares of its own common stock ($1 par value), which was trading at $___ per share at the acquisition date. (a) Determine the Acquisition Cost. (b) Pass Journal Entry in the Book of Parent Company. [Assume your own figure in the blank spaces.].
- Q1) When a company owns 50% or more of another company, accounting standards require that the owner (parent) consolidates its financial statements with the subsidiary. Explain the rationale and the reasons behind that requirement.Accenture purchases 55% of the voting common stock of JBL. After the purchase, Accenture has a controlling influence over JBL. (1) Which method does Accenture use to account for its investment in JBL? (2) What type of financial statements does Accenture prepare after the acquisition?Windsor Company acquired an 80% interest in the common stock of Sheridan Company for $ 1,541,800 on July 1, 2022. Sheridan Company's stockholders' equity on that date consisted of: Common stock $801, 400 Other contributed capital 400, 400 Retained earnings 332,300 Compute the total noncontrolling interest to be reported in the consolidated balance sheet assuming the: (1) parent company concept. (2) economic unit concept. Total Noncontrolling Interest (1) Parent company concept $ (2) Economic unit concept $
- In which of the following situations should the provision of PFRS 3 be applied? a. ABC Insurance acquiring four wholly-owned subsidiaries. b. ABC Ltd. has an interest of 20% in equity shares of Entity D. c. ABC and DEF Bank has a holding of 50% each in the equity of GHI Pharmaceuticals, Ltd. d. ABC Inc. has 50% equity interest in DEF Ltd.Jacobson Company is considering an investment in the common stock of Biltrite Company. What are the accounting issues surrounding the recording of income in future periods if Jacobson purchases: a. 15% of Biltrite’s outstanding shares. b. 40% of Biltrite’s outstanding shares. c. 100% of Biltrite’s outstanding shares. d. 80% of Biltrite’s outstanding shares.Assuming the existence of two companies, A and B, which of the following is not a business combination? Company C is formed to acquire all the assets and liabilities of Company A and Company B. Both Company A and Company B liquidate. Company A acquires all assets and liabilities of Company B, and Company B liquidates. Company A acquires all assets and liabilities of Company B. Company B continues as a company, holding shares of Company A. Company A acquires a group of assets of Company B, the group of assets not constituting a business. Company B continues to operate as a company.