If the parent company owns more than 50% of the subsidiary’s voting stock, and effectively has...
If the parent company owns more than 50% of the subsidiary’s voting stock, and effectively has control of the subsidiary, consolidated financial statements are:
Multiple Choice
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not possible.
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required.
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required only by the SEC.
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optional.
Homework Answers
When a company owns more than 50% of the subsidiary's common stock or voting stock a parent subsidiary relationship is formed and it requires the consolidation reporting. A subsidiary company is controlled by its parent company which owns more than 50% of its stock. Consolidated financial statements shows the transaction of subsidiary and parent company as a single entity. Intercompany transactions are eliminated at the time of preparation of consolidated financial statements. Answer : Required
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If the parent company owns more than 50% of the subsidiary’s
voting stock, and effectively has...
A parent owns less than 100% of the voting stock of its subsidiary. On its consolidated...
A parent owns less than 100% of the voting stock of its subsidiary. On its consolidated income statement, the earnings per share number is calculated using which of the following amounts in the numerator? A. Consolidated net income less consolidated dividends B. Consolidated net income C. Consolidated net income plus noncontrolling interest in net income D. Consolidated net income less noncontrolling interest in net income
Which statement is true concerning the use of pushdown accounting for a subsidiary’s separate financial statements?...
Which statement is true concerning the use of pushdown accounting for a subsidiary’s separate financial statements? A. Pushdown accounting is required when a subsidiary becomes wholly owned, but is optional if less than 100% of the subsidiary’s stock is acquired. B. If a subsidiary uses pushdown accounting, eliminating entry R is not necessary when consolidating a parent and subsidiary at the date of acquisition. C.If an acquisition is nontaxable, the subsidiary’s asset valuations will match those used for tax reporting....
Facts: Assume that on January 1, Parent Company ("Parent Co") acquires 100% of the common stock...
Facts: Assume that on January 1, Parent Company ("Parent Co") acquires 100% of the common stock of Subsidiary Company ("Sub Co") for $800,000. On the acquisition date, Sub Co reports a book value of Stockholders' Equity of $320,000. Parent Co is willing to pay the purchase price because the subsidiary owns property, plant and equipment that are worth $150,000 more than the amount at which they are reported on Sub Co's books. In addition, Sub Co owns a customer list...
Assume the Parent company acquires its subsidiary by exchanging 35,000 shares of its Common Stock, with...
Assume the Parent company acquires its subsidiary by exchanging 35,000 shares of its Common Stock, with a fair value on the acquisition date of $60 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary’s assets and liabilities at an amount equaling their book values except for an unrecorded Patent owned by the subsidiary with a fair value of $200,000. Any further discrepancy between...
Q3. Assume that a parent company owns 80 percent of its subsidiary. The parent company uses...
Q3. Assume that a parent company owns 80 percent of its subsidiary. The parent company uses the equity method to account for its investment in subsidiary. On January 1, 2012, the parent company issued to an unaffiliated company $1,000,000 (face value) 10 year, 10 percent bond payable for a $61,000 premium. The bonds pay interest in December 31 of each year. On January 1, 2015, the subsidiary acquired 40 percent of the bonds for $386,000. Both companies use straight-line amortization....
8) On January 1, 2014, a parent company purchased 90 percent of the stock in a...
8) On January 1, 2014, a parent company purchased 90 percent of the stock in a subsidiary. On January 1, 2010, no goodwill was recorded and the book value of the subsidiary's assets equals the market value of the subsidiary's assets. On December 31, 2014, the two companies report the following data: Parent Company Net Income for Past Year $100 million Subsidiary Company Net Income for Past Year $50 million What is the consolidated net income for the year ended...
Zoom Shoes Inc. has 115,000 shares of stock outstanding. GAS Running Company owns 35,000 shares of...
Zoom Shoes Inc. has 115,000 shares of stock outstanding. GAS Running Company owns 35,000 shares of Zoom Shoes Inc. Which of the following is true? a.GAS Running Company is the subsidiary company. b.Zoom Shoes Inc. is the parent company. c.GAS Running Company is required to use the equity method for this investment. d.GAS Running Company is required to combine the financial statements of Zoom Shoes Inc. and report as a single company.
Parent Co paid $176,000 for 80% of the outstanding voting stock of Sub Co on January...
Parent Co paid $176,000 for 80% of the outstanding voting stock
of Sub Co on January 1, 2018, when Sub Co’s stockholders’ equity
consisted of $120,000 common stock and $60,000 retained earnings.
This implied that the total fair value of Sub co is $220,000
($176,000 / 80%). The company assigned the $40,000 excess fair
value to previously unrecorded patents with a 10-year useful
life.
Parent Co’s $36,800 income from Sub Co for 2018 consisted of 80%
of Sub Co’s $50,000...
________ are equity securities in which the investor owns 20% or more, but less than 50%,...
________ are equity securities in which the investor owns 20% or more, but less than 50%, of the investee's voting stock. Held-to-maturity investments Significant interest investments Available-for-sale investments Controlling interest investments
Assume that on January 1, 2018, a parent company acquired an 85% interest in a subsidiary's...
Assume that on January 1, 2018, a parent company acquired an 85% interest in a subsidiary's voting common stock. On the date of acquisition, the fair-value of the subsidiary's net assets equaled their reported book values except for machinery and equipment, which had a fair value of $780,000 and a reported book value of $325,000. the machinery and equipment had a 5-year remaining useful life and no salvage value. The following are the highly summarized pre-consolidation income statements of the...
Facts: Assume that on January 1, Parent Company ("Parent Co") acquires 100% of the common stock of Subsidiary Company ("Sub Co") for $800,000. On the acquisition date, Sub Co reports a book value of Stockholders' Equity of $320,000. Parent Co is willing to pay the purchase price because the subsidiary owns property, plant and equipment that are worth $150,000 more than the amount at which they are reported on Sub Co's books. In addition, Sub Co owns a customer list...
8) On January 1, 2014, a parent company purchased 90 percent of the stock in a subsidiary. On January 1, 2010, no goodwill was recorded and the book value of the subsidiary's assets equals the market value of the subsidiary's assets. On December 31, 2014, the two companies report the following data: Parent Company Net Income for Past Year $100 million Subsidiary Company Net Income for Past Year $50 million What is the consolidated net income for the year ended...
Parent Co paid $176,000 for 80% of the outstanding voting stock
of Sub Co on January 1, 2018, when Sub Co’s stockholders’ equity
consisted of $120,000 common stock and $60,000 retained earnings.
This implied that the total fair value of Sub co is $220,000
($176,000 / 80%). The company assigned the $40,000 excess fair
value to previously unrecorded patents with a 10-year useful
life.
Parent Co’s $36,800 income from Sub Co for 2018 consisted of 80%
of Sub Co’s $50,000...
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