Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Noncontrolling interest is reported in the equity section of the consolidated balance sheet: a. In separate lines representing the noncontrolling interests share of the consolidated

Noncontrolling interest is reported in the equity section of the consolidated balance sheet:

a. In separate lines representing the noncontrolling interests share of the consolidated entitys shareholders equity accounts (capital stock, retained earnings, etc.)

b. In two separate lines representing the noncontrolling interests share of (1) the consolidated entitys stock accounts and (2) retained earnings and accumulated other comprehensive income accounts

c. As one line as a component of consolidated shareholders equity

d. As one line, as a contra to total consolidated shareholders equity

17. A parent acquires 80% of the stock of its subsidiary. Following U.S. GAAP, on the consolidated balance sheet less than 20% of the total goodwill will likely be allocated to the noncontrolling interest because:

a. U.S. GAAP allows companies the option of only recognizing the parents share of goodwill.

b. The price per share of the noncontrolling interests stock reflects a premium over the price per share paid by the parent.

c. U.S. GAAP does not allow goodwill to be allocated to the noncontrolling interest.

d. The parent usually pays a higher price per share because it acquires a controlling interest.

18. A parent owns 75% of a subsidiarys voting stock. On the consolidated balance sheet at the date of acquisition, at what value are consolidated plant assets reported?

a. The parents book value of plant assets plus 75% of the subsidiarys fair value of plant assets.

b. The parents fair value of plant assets plus the subsidiarys fair value of plant assets.

c. The parents book value of plant assets plus the subsidiarys fair value of plant assets.

d. The parents book value of plant assets plus 75% of the subsidiarys book value of plant assets.

19. Purus Corporation has a financial relationship with Swift Financial Inc. Although Purus owns none of Swifts voting stock, analysis determines that Swift is a variable interest entity and Purus is its primary beneficiary. How is the noncontrolling interest in Swift reported on Purus consolidated balance sheet at the date Purus first consolidates it, assuming Swift and Purus were already under common control?

  1. In the equity section of the consolidated balance sheet, at Swifts book value.
  2. As an investment account in the asset section of Purus consolidated balance sheet, at Swifts book value.
  3. In the equity section of the consolidated balance sheet, at Swifts fair value.
  4. As an investment account in the asset section of Purus consolidated balance sheet, at Swifts fair value.

20. Purus Corporation has a financial relationship with Swift Financial Inc. Although Purus owns none of Swifts voting stock, analysis determines that Swift is a variable interest entity and Purus is its primary beneficiary. How is the noncontrolling interest in Swift reported on Purus consolidated balance sheet at the date Purus first consolidates it, assuming Purus and Swift were not previously under common control?

  1. In the equity section of the consolidated balance sheet, at Swifts book value.
  2. As an investment account in the asset section of Purus consolidated balance sheet, at Swifts book value.
  3. In the equity section of the consolidated balance sheet, at Swifts fair value.
  4. As an investment account in the asset section of Purus consolidated balance sheet, at Swifts fair value.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions