Pagan Corporation owns 85% of the outstanding voting stock of Sagan Company, and Maa Corporation owns the remaining 15% of Sagan’s voting stock. On the consolidated financial statements of Pagan Corporation and Sagan, Maa is: Options: a. A noncontrolling interest. b. A related party. c. An equity investee. d. An affiliate.

Pagan Corporation owns 85% of the outstanding voting stock of Sagan Company, and Maa Corporation owns the remaining 15% of Sagan’s voting stock. On the consolidated financial statements of Pagan Corporation and Sagan, Maa is: Options: a. A noncontrolling interest. b. A related party. c. An equity investee. d. An affiliate.

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter18: Corporations: Organization And Capital Structure

Section: Chapter Questions

Problem 26P

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Pagan Corporation owns 85% of the outstanding voting stock of Sagan Company and Maa Corporation owns the remaining 15% of Sagan's voting stock. On the consolidated financial statements of Pagan Corporation and Sagan, Maa is Question 18Answer a. an affiliate. b. a noncontrolling interest. c. an equity investee. d. a related party.
Pepper Corporation owns 90% of the outstanding voting stock of Salt Company and Nike Corporation owns the remaining 10% of Salt’s voting stock. On the consolidated financial statements of Pepper Corporation and Subsidiary, Nike is: Select one: a. An affiliate b. A non-controlling interest c. An associate d. An equity investee
Wixi Co. has the following equity investments in FSN, DELL, and ATI. (1) Which of these companies are subsidiaries of Wixi? (2) How are individual assets and liabilities of a parent and its subsidiary(ies) reported on a balance sheet? FSN stock: Wixi owns 70% of the voting common stock and has controlling influence. DELL stock: Wixi owns 5% of the voting common stock and has insignificant influence. ATI stock: Wixi owns 30% of the voting common stock and has significant influence.
The shareholders of ABC Corporation would like to know the valuation of their ownership in the entity. Relative valuation based on its two closest competitors will be made. The price-book value ratio will be used. X Inc. Y Co. Market value of ordinary shares 5,980,000 7,020,000 Book Value of ordinary shares 5,200,000 6,000,000 ABC has a book value of ordinary shares at P5,800,000. This includes aninvestment property that provides additional income. It has a book value ofP420,000 but a market value of P650,000. Also, a material error in theaccounts payable was identified and it resulted to a P300,000understatement. After considering these, the remaining and corrected bookvalue can be valued using relative valuation. What is the total relative valueof ABC ordinary shares?
3. In which of the following situations should the consolidated financial statements be presented?Group of answer choices a. INH Insurance is a parent of group of four wholly-owned subsidiaries. b. AFG Ltd. has an interest of 20% in equity shares of Entity D. c. PQR and HJK Bank has a holding of 50% each in the equity of XYZ Pharmaceuticals, Ltd. d. ABC Inc. has 5% equity interest in PKJ, Ltd
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3) ABC Company owns 60% of the stock of XYZ Company and prepares consolidated financial statements. The rationale for preparing consolidated financial statements is the economic entity assumption and comparability. (True/False)
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ABC and XYZ (the parties) entered into an agreement to establish a separate vehicle (DEF) and share joint control over the separate vehicle. The assets and liabilities of DEF are considered as assets and liabilities of DEF and not the assets and liabilities of ABC and XYZ. Upon formation of DEF, DEF issued 70% of its shares equally to ABC and XYZ and the remaining 30% are issued to other investors. Summary transactions for the first two years of operations of DEF are as follows: 2022 2023 Proceeds from Issuance of shares P110,000,000 Revenues 12,000,000 16,000,000 Various costs and operating expenses 8.000.000 11.000.000 Dividends declared (to be paid in 2024) How much is the carrying amount of the investment in DEF to be presented in the books of ABC as of December 31, 2022 and 2023? What is the investment income for 2022 and 2023?
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Which of the following statements are true?I. Lechon Corporation has a 25% interest in Mang Tomas Company. Catsup, Inc. is a subsidiary of Mang Tomas. Lechon and Catsup are related parties.II. Rico Corporation is a venturer of Zubuchon Company. CNT, Inc. is a subsidiary of Zubuchon. Rico and CNT are related parties.III. Bergs Corporation is a venturer of Mechado Road Joint Venture and a 25% interest investor of Dinuguan Fourth Floor Company. Mechado Road and Dinuguan Company are related parties. IV. Ersao Company and Burger King Company are under the common control of Foodie Corporation. Ersao and Burger King are related parties