Exam 4: Consolidated Financial Statements and Outside Ownership

One company buys a controlling interest in another company on April 1 during a company's calendar year of operations.How should the pre-acquisition subsidiary revenues and expenses be handled in the consolidated balances for the year of acquisition?

When a parent uses the acquisition method for business combinations and sells shares of its subsidiary, which of the following statements is false?

Using the acquisition method, determine the amount of goodwill associated with Caldwell's purchase of Club.

How much does Pell record as income from Demers for the year ended December 31, 2021?

What amount should have been reported for the land in a consolidated balance sheet at the acquisition date?

How would you determine the amount of goodwill to be recognized at date of acquisition when there is a noncontrolling interest present?

Pennant Corp.owns 70% of the common stock of Scarvens Co.Scarvens' revenues for 2020 totaled $200,000. Required: What amount of Scarvens' revenues would be included in the consolidated revenues under the acquisition method of accounting for business combinations?

When a parent uses the initial value method throughout the year to account for its 80% investment in an acquired subsidiary, which of the following statements is true at the date immediately preceding the date on which adjustments are made on the consolidated worksheet?

Compute the noncontrolling interest in Demers at December 31, 2020.

What is the amount of Kailey's net income to the controlling interest for 2019?

In consolidation at December 31, 2019, what adjustment is necessary for Hogan's Buildings account?

In consolidation at December 31, 2019, what adjustment is necessary for Hogan's Land account?

In consolidation at January 1, 2019, what adjustment is necessary for Hogan's Equipment account?

What is the noncontrolling interest balance as of December 31, 2020?

Select True (T) or False (F) for each of the following statements: _____ 1.A parent will recognize a gain or loss if it sells a portion of its investment in a subsidiary and maintains control after the sale. _____ 2.A parent sells a portion of its investment in a subsidiary and no longer maintains control.This sale of shares represents a remeasurement event for the investee. _____ 3.International financial reporting standards (IFRS) allow an option to value the noncontrolling interest with goodwill or to value the noncontrolling interest without goodwill. _____ 4.Consolidated net income represents the combined net income of the parent and subsidiary after subtracting the noncontrolling interest in the net income of the subsidiary. _____ 5.The total acquisition-date fair value of an acquired firm is the sum of the fair value of the controlling interest and the fair value of the noncontrolling interest. _____ 6.When control of a subsidiary is acquired on a date other than the first day of a fiscal year, excess amortization expenses are pro-rated to include only the post-acquisition period. _____ 7.For a mid-year acquisition following an equity method investment of the same company, the consolidated income statement will report consolidated revenues and expenses for the entire year. _____ 8.In a step acquisition where the parent previously held a noncontrolling interest in the acquired firm, the parent remeasures the prior interest to fair value. _____ 9.When a parent has control over a subsidiary with less than 100 percent ownership, and thereafter increases its ownership, the parent remeasures the prior interest to fair value.

Beta Corp.owns less than one hundred percent of the voting common stock of Shedds Co.Under what conditions will Beta be required to prepare consolidated financial statements?

Compute Pell's investment in Demers at December 31, 2021.

MacHeath Inc.bought 60% of the outstanding common stock of Nomes Inc.in an acquisition that resulted in the recognition of goodwill.Nomes owned a piece of land that cost $250,000 but was worth $600,000 at the date of acquisition.What value would be attributed to this land in a consolidated balance sheet at the date of acquisition?

In consolidation, the total amount of expenses related to Kailey, and to Denber's acquisition of Kailey, for 2019 is determined to be

When a parent uses the equity method throughout the year to account for its 80% investment in an acquired subsidiary, which of the following statements is false at the date immediately preceding the date on which adjustments are made on the consolidated worksheet?