7. Suppose that a parent company acquires a subsidiary and the following is an elimination entry before you prepare consolidated financial statements as of the date of acquisition. Common stock 200,000 Retained earnings 100,000 Land 10,000 Building 60,000 Goodwill 17,500 Investment in subsidiary 310,000 NCI in net assets of subsidiary 77,500 Now assume that in the first year of acquisition, the subsidiary reports a net income of 20,000 TL and declares a dividend of 12,000 TL. The useful life of the building is 10 years. The parent applies equity method. What amount will be reported as noncontrolling interest on the consolidated balance sheet? a) 77,900 TL b) 79,100 TL c) 80,300 TL d) 81,500 TL

7. Suppose that a parent company acquires a subsidiary and the following is an elimination entry before you prepare consolidated financial statements as of the date of acquisition. Common stock 200,000 Retained earnings 100,000 Land 10,000 Building 60,000 Goodwill 17,500 Investment in subsidiary 310,000 NCI in net assets of subsidiary 77,500 Now assume that in the first year of acquisition, the subsidiary reports a net income of 20,000 TL and declares a dividend of 12,000 TL. The useful life of the building is 10 years. The parent applies equity method. What amount will be reported as noncontrolling interest on the consolidated balance sheet? a) 77,900 TL b) 79,100 TL c) 80,300 TL d) 81,500 TL

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

7. Suppose that a parent company acquires a subsidiary and the following is an elimination entry
before you prepare consolidated financial statements as of the date of acquisition. Common stock
200,000 Retained earnings 100,000 Land 10,000 Building 60,000 Goodwill 17,500 Investment in
subsidiary 310,000 NCI in net assets of subsidiary 77,500 Now assume that in the first year of
acquisition, the subsidiary reports a net income of 20,000 TL and declares a dividend of 12,000 TL.
The useful life of the building is 10 years. The parent applies equity method. What amount will be
reported as noncontrolling interest on the consolidated balance sheet?
a) 77,900 TL b) 79,100 TL c) 80,300 TL d) 81,500 TL
8. Suppose that net profit margin is 30%, asset turnover rate is 50%, and debt-to-equity is 2. What
would be the ROE?
a) 45% b) 50% c) 55% d) 60%
9. Suppose that a company is established in the beginning of the year 2020. As of the 2020 year end,
you have the following data: (a) Current ratio=1.2; (b) Equity multiplier = 4; (c) Fixed:
Fixed assets/Invested
capital = 0,4; (d) Total liabilities = 3.000 TL. You have also the following additional data for the year
2020: (a) Revenue = 10.000 TL; (b) Gross profit margin = 50%; (c) OpEx = 4.000 TL; (d) Depreciation
expense = 100 TL; (e) Interest expense = 300 TL; (f) Income tax = 20%; (g) price per share = 2 TL. What
is ROIC?
a) 1.00 b) 0.27 c) 0.80 d) 0.56

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