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Test bank For Advanced Accounting Exam III (15th Edition by Joe Ben Hoyle)
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Test bank For Advanced AccountingExam III (15th Edition by Joe Ben Hoyle)
When a parent company owns less than 100% of the stock of a subsidiary company, what
amount of the subsidiary's assets, liabilities, and equity are included on the consolidated
balance sheet?
1. the laws of some countries prevent complete ownership by a foreign firm.
2. the parent firm may not have resources sufficient to acquire all of its subsidiary shares.
3. some outside owners of the subsidiary company may have been unwilling to sell their shares.
When a parent company owns less than 100% percent of subsidiary's voting shares, it must
account for the (BLANK) in the consolidated financial statements.
Noncontrolling Shareholders Interest
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A noncontrolling interest in a consolidated entity may be described as
an ownership interest in a subsidiary held by owners other than the parent company.
A consolidated balance sheet reports a noncontrolling interest as
a component of owners' equity.
Which of the following are identified and measured by an acquiring firm as of the date of a 90%
subsidiary acquisition.
, 1. 100% of all subsidiary assets and liabilities at full fair values.
2. Noncontrolling interest at acquisition-date fair value.
3. Goodwill or a gain from bargain purchase.
When the collective acquisition-date fair values of the subsidiary's identifiable net assets
exceeds the sum of the acquisition-date fair values of the controlling and non-controlling
interests, then the acquiring company recognizes a gain on
Bargain Purchase
In consolidated financial reports, the (BLANK) represents a set of owners, in addition to the
parent company, who have a legal claim to the subsidiary's net assets.
Noncontrolling Interest
For financial reporting purposes, the acquisition method views a parent company and its
controlled, but less than 100% owned, subsidiary as
a single economic unit.
Regardless of its percentage ownership, when a parent acquires control over a subsidiary, the
parent must recognize the noncontrolling interest at its acquisition-date (BLANK) value
Fair
When a parent acquires a controlling, but less-than-100% interest in a subsidiary, the basic
elements for establishing an acquisition-date subsidiary value include
1. the fair value of the noncontrolling interest.
2. the fair value of the controlling interest.
Why does measuring the acquisition-date fair value of a noncontrolling interest require
estimation?
The noncontrolling interest shares were neither bought nor sold as part of the acquisition.
True or false: Quoted prices in active markets are required to properly value the equity shares
held by a noncontrolling interest.
False
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