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A controlling interest in a company implies that the parent company
a. |
owns all of the subsidiary's stock. |
b. |
has acquired a majority of the subsidiary's common stock. |
c. |
has paid cash for a majority of the subsidiary's stock. |
d. |
has transferred common stock for a majority of the subsidiary's outstanding bonds and debentures. |
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- A subsidiary owns shares of its parent company. Which of the following is true concerning the treasury stock approach?a. It is one of several options to account for mutual holdings available under current accounting standards.b. The original cost of the subsidiary’s investment is a reduction in consolidated stockholders’ equity.c. The subsidiary accrues income on its investment by using the equity method.d. The treasury stock approach eliminates these shares entirely within the consolidation process.Why might a subsidiary decide to issue new shares of common stock to parties outside the business combination?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.
- Assuming the existence of two companies, A and B, which of the following is not a business combination? a. Company A acquires all assets and liabilities of Company B. Company B continues as a company, holding shares of Company A. b. Company C is formed to acquire all the assets and liabilities of Company A and Company B. Both Company A and Company B liquidate. c. Company A acquires all assets and liabilities of Company B, and Company B liquidates. d. 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.Under the equity method of accounting for the operating results of a subsidiary, the dividends declared by the subsidiary to the parent company are accounted for by the parent company as A. Dividend revenue on the declaration date. B. A reduction of the Investment in Subsidiary account on the payment date. C. Dividend revenue on the payment date. D. A reduction of the Investment in Subsidiary account on the declaration date.Choose the correct. A subsidiary owns shares of its parent company. Which of the following is true concerning the treasury stock approach?a. It is one of several options to account for mutual holdings available under current accounting standards.b. The original cost of the subsidiary’s investment is a reduction in consolidated stockholders’ equity.c. The subsidiary accrues income on its investment by using the equity method.d. The treasury stock approach eliminates these shares entirely within the consolidation process.
- What is the correct method for treating a vesting differential linked to the acquisition of shares? privileged rights of the subsidiary by the parent company? Select an answer: a. It must be allocated to identifiable net assets or goodwill. b. It must be distributed in proportion to the identifiable assets and liabilities of the subsidiary. c. It must be charged to consolidated retained earnings or credited to contributed surplus. d. It must be taken care of in the current year.Company A owns shares of Company B and Company C. The statements of Company B are consolidated with those of Company A. The statements of Company C are not consolidated. Company A reports "Minority Interest" on its balance sheet. This account represents: Select one: O a. A's minority share of the stock of B O b. A's minority share of the stock of C O c. the minority share by outside owners of the stock of B O d. the minority share by outside owners of the stock of C O e. the minority share by outside owners of the stock of AHippo Co. is a holding company. It holds all the shares of Opco. Shareholder H holds all the shares of Hippo Co. What should Opco be directed to do prior to its sale in order to minimize taxable capital gains? a. Transfer all assets to Hippo Co. before sale. b. Transfer all shares in Opco to Shareholder H prior to the sale c. Transfer all the shares of Hippo Co. to shareholder H prior to the sale. d. Pay a tax-free dividend to Hippo Co. from Opco prior to the sale
- Which one of the following is correct to calculate the percentage shareholding of the parent? 1. The number of shares issued by subsidiary are divided by share capital of the parent company? 2. The number of shares issued by a subsidiary are divided by the share capital of the subsidiary 3. The investment by a parent in a subsidiary are divided by the share capital of the subsidiary 4. The number of shares acquired by a parent in a subsidiary are divided by the number of shares issued by the subsidiaryThe motivation of a parent company to purchase the outstanding bonds of a subsidiary could be to: a. replace the existing debt with new debt at a lower interest rate. b. reduce the parent company's acquisition price for the subsidiary. c. increase the parent company's ownership percentage in the subsidiary. d. create interest revenue to offset interest expense in future income statements.Determine the percentage of outstanding voting shares of the subsidiary acquired by the parent.