A company has purchased 80% of another company. If the proportional consolidation method is used, the consolidated balance sheet on the date of acquisition will contain: O a 100% of the subsidiary's assets and liabilities at book value Ob the parent's share of the subsidiary's assets and liabilities at fair value. Oc the parent's share of the subsidiary's assets and liabilities at book value Od 100% of the subsidiary's assets and liabilities at fair value. The subsidiary lends money to its parent at a 6% interest rate. How would the loan effect non-controlling interest? a. The subsidiary would book its share of any interest revenue. O b. This would have no effect on the non-controlling interest . The subsidiary would record any interest revenue as an extraordinary gain. Od The non-controlling interest balance would be reduced by the amount of the loan. Parent purchased all the outstanding common shares of its new subsidiary $800,000 for cash. On that date, the subsidiary's assets and liabilities included $2,000,000 of inventory, land with a book value of $120,000, and $1,400,000 in liabilities. The subsidiary's book values were equal to their fair market values, except for the company's land, which was estimated to have a fair market value $50,000 higher than its book value. How much goodwill would be created by the parent's acquisition of its new subsidiary? on Nil Ob $50,000 Oc$30,000 Od $80,000 Accountants use possible indicators of significant influence when evaluating an investment. Which one of the following responses is NOT a possible indicator of significant influence? O a. The Associate's new CEO was previously CEO of the investor company. O b. The investor can elect members to the Board of Directors, O c The investor has engaged in many intercompany transactions with the Associate Od. The investor has the right to participate in the policy-making process While preparing the consolidated balance sheet, which one of the following statements is correct concerning adjustments (if any) to retained earnings. a. No adjustment is required if the parent has been using the Equity Method. Ob. No adjustment is required under either the Cost or the Equity methods. Oc Under both the Cost and Equity methods, the parent must record its share of its Subsidiary's income less any dividends received from the subsidiary. od Under both the cost and Equity methods, the parent must record its share of its subsidiary's income