Following the accounting concept of a business combination, a business combination occurs when acompany acquires an equity interest in another entity and has Question 17Answer a. control over the entity, irrespective of the percentage owned. b. More than 50% ownership in the entity. c. 100% ownership in the entity. d. At least 20% ownership in the entity.

Following the accounting concept of a business combination, a business combination occurs when acompany acquires an equity interest in another entity and has Question 17Answer a. control over the entity, irrespective of the percentage owned. b. More than 50% ownership in the entity. c. 100% ownership in the entity. d. At least 20% ownership in the entity.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter6: Audit Evidence

Section: Chapter Questions

Problem 15CYBK

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Following the completion of a business combination in the form of a statutory consolidation, what is the balance in the new corporation’s Retained earnings account? A. The sum of the acquirer and acquiree retained earnings account balances. B. The acquirer retained earnings account balance C. Zero D. The acquiree retained earnings account balance
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Q1) When a company owns 50% or more of another company, accounting standards require that the owner (parent) consolidates its financial statements with the subsidiary. Explain the rationale and the reasons behind that requirement.
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How is non-controlling interest in the subsidiary’s net assets presented in the consolidated statement of financial position? a. Within equity but separately from the equity of the owners of the parents. b. Within equity as part of retained earnings. c. Any of these as a matter of accounting policy choice. d. As a mezzanine item between liabilities and equity.
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