Week 4 Comprehensive Illustration Post # 1

xlsx

School

DeVry University, Chicago *

*We aren’t endorsed by this school

Course

434

Subject

Accounting

Date

May 26, 2024

Type

xlsx

Pages

Uploaded by ChiefElectronMoose37

c. Assume instead that the acquisition-date fair value of the noncontrolling interes - The noncontrolling interest in equity would change by $2,000. - The total equity would be adjusted accordingly. - Any related ratios or percentages involving the noncontrolling interest would also be affec Controlling Interest Non-Controlling Interest Fair Value at Acquisition Date $425,000 $104,500 Relative Fair Value of Sun's Net $410,000 $102,500 Identifiable Assets (80% & 20%) Goodwill $15,000 $2,000 By the noncontrolling interest being $104,500, the fair value and the goodwill would both in noncontrolling interest at $164,000 instead of $162,000. - Noncontrolling interest refers to the portion of a subsidiary's equity that is not owned by t - In the case of Atwater Company acquiring 80% of Belwood Company and the building hav - Since the fair value represents the true market value of the building, it would be reflected - A control premium is the additional amount paid by an acquiring company over the marke - In consolidated financial statements, a control premium can impact the valuation of asset - Noncontrolling interest's claims are reported in the equity section of the consolidated fina - They are typically shown separately from the parent company's equity to differentiate the - The noncontrolling interest in a subsidiary is calculated as a proportion of the subsidiary's - It is usually calculated as a percentage of the subsidiary's net assets or profits attributable - Allsports should not adjust its consolidated balances for the preacquisition subsidiary reve - These amounts are only relevant for the period post-acquisition and should not impact the - Tree should adjust its accounting method from fair value to consolidation for the previous - The financial statements should reflect the full consolidation of the subsidiary following th - The purpose of adjusting the book value of the investment account after selling a partial i - This adjustment ensures that the investment account accurately reflects the remaining ow - The parent would record the sales transaction by recognizing a gain or loss on the sale of - The investment account would be reduced by the amount corresponding to the percentag 10. In question (8), how would Duke account for the remainder of its investment subsequen - Following the sale of the partial interest, Duke would account for the remainder of its inve - The investment account would be adjusted accordingly to reflect the ownership stake in t 1. What does the term noncontrolling interest mean? 2. Atwater Company acquires 80 percent of the outstanding voting stock of Belwood Co 3. What is a control premium and how does it affect consolidated financial statements? 4. Where should the noncontrolling interest’s claims be reported in a set of consolidated 5. How is the noncontrolling interest in a subsidiary company calculated as of the end o 6. December 31 consolidated financial statements are being prepared for Allsports Com 7. Tree, Inc., has held a 10 percent interest in the stock of Limb Company for several ye 8. Duke Corporation owns a 70 percent equity interest in Salem Company, a subsidiary 9. In question (8), how would the parent record the sales transaction?

st was $104,500. What balances in the December 31, 2021, consolidated statements wo cted. Total $529,500 $512,500 $17,000 ncrease by $2,000. This would show goodwill at $17,000 instead of $15,000, and the parent company, usually held by outside investors. It represents the ownership stak ving a book value of $160,000 but a fair value of $220,000, the building would be conso d at $220,000 in the consolidated financial statements to accurately represent the asse et value of the target company to gain controlling interest. ts and liabilities, potentially leading to adjustments in goodwill and the recognition of fa ancial statements. e portion of the subsidiary's equity attributable to the noncontrolling interest. s equity not owned by the parent company. e to the noncontrolling interest. enues and expenses. e consolidated financial statements for the period prior to the acquisition date. s 10% ownership interest. he acquisition of the controlling interest. interest is to reflect the change in ownership and the related impact on the financial sta wnership stake in the subsidiary. the partial interest. ge of the subsidiary's equity interest sold. nt to the sale of this partial interest? estment using the equity method or the fair value method, depending on the level of co the subsidiary. ompany. On that date, Belwood possesses a building with a $160,000 book value but a $ d financial statements? of a reporting period? mpany and its new subsidiary acquired on July 1 of the current year. Should Allsports ad ears. Because of the level of ownership, this investment has been accounted for using t corporation. During the current year, a portion of this stock is sold to an outside party.

ould change? ke in the subsidiary not attributable to the parent company. olidated at its fair value. ets of the combined entities. air value adjustments. atements. ontrol retained over the subsidiary. $220,000 fair value. At what value would this building be consolidated? djust its consolidated balances for the preacquisition subsidiary revenues and expenses the fair-value method. At the beginning of the current year, Tree acquires an additional Before recording this transaction, Duke adjusts the book value of its investment accou

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version