This is a sample CPA FAR question: Company ABC recently acquired a subsidiary and needs to prepare consolidated financial statements. The subsidiary has assets worth $2 million, liabilities of $800,000, and common stock of $600,000. The non-controlling interest in the subsidiary is 20%. What is the consolidated value of the subsidiary's liabilities that should be reported? A) $800,000 B) $640,000 C) $520,000 D) $480,000 Please don't provide answer in image format thank you

This is a sample CPA FAR question: Company ABC recently acquired a subsidiary and needs to prepare consolidated financial statements. The subsidiary has assets worth $2 million, liabilities of $800,000, and common stock of $600,000. The non-controlling interest in the subsidiary is 20%. What is the consolidated value of the subsidiary's liabilities that should be reported? A) $800,000 B) $640,000 C) $520,000 D) $480,000 Please don't provide answer in image format thank you

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 2DIC

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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.

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This is a sample CPA FAR question:

Company ABC recently acquired a subsidiary and needs to prepare consolidated financial statements. The subsidiary has assets worth $2 million, liabilities of $800,000, and common stock of $600,000. The non-controlling interest in the subsidiary is 20%. What is the consolidated value of the subsidiary's liabilities that should be reported?

A) $800,000 B) $640,000 C) $520,000 D) $480,000

Please don't provide answer in image format thank you

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Question 1 .Panther Corporation decided to establish Snake Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Snake issued 100,000 shares of $2 par value common stock. The following information is provided on the assets and liabilities transferred: Cash Accounts Receivable Patent Building & Equipment Land Accounts Payable Cost $50,000 80,000 70,000 200,000 60,000 20,000 Book Value $50,000 75,000 70,000 140,000 60,000 20,000 Required: a. Give the journal entry that Panther recorded for the transfer of assets and liabilities to Snake b. Give the journal entry that Snake recorded for the receipt of assets and liabilities from Panther
Use the following information in answering the next item(s): IRON MAN CORP. acquired 80% of RUST CORP.'s outstanding shares. The statements of financial position of both entities immediately after the acquisition are shown below: IRON MAN CORP. 430,000 1,570,000 2,000,000 RUST CORP. Investment in subsidiary (at cost) 750,000 750,000 Other assets Assets Liabilities Ordinary share capital Retained earnings Liabilities and Stockholders' equity At the date of purchase, the fair value of RUST's assets was P50,000 more than the aggregate carrying amounts. Non-controlling interest is measured under the proportionate share method. 750,000 1,000,000 250,000 2,000,000 400,000 310,000 40,000 750,000 8. How much is the goodwill in the consolidated balance sheet prepared immediately after the acquisition? 110,000 120,000 С. 140,000 160,000 А. В. D. 9. In the consolidated balance sheet prepared immediately after the acquisition, the consolidated total assets should amount to: 2,910,000 2,480,000 C.…
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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…
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Pab Corporation decided to establish Sollon Company as a wholly owned subsidiary by transferring some of its existing assets and liabilities to the new entity. In exchange, Sollon issued Pab 35,000 shares of $7 par value common stock. The following information is provided on the assets and accounts payable transferred: Cost Book Value Fair Value Cash $ 32,000 $ 32,000 $ 32,000 Inventory 83,000 83,000 83,000 Land 69,000 69,000 99,000 Buildings 188,000 147,000 249,000 Equipment 95,000 74,000 123,000 Accounts Payable 58,000 58,000 58,000 Required: Prepare the journal entry that Pab recorded for the transfer of assets and accounts payable to Sollon Prepare the journal entry that Sollon recorded for the receipt of assets and accounts payable from Pab.
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G Company is considering the takeover of K Company whereby it will issue 8,000 common shares for all of the outstanding shares of K Company. K Company will become a wholly owned subsidiary of G Company. Prior to the acquisition, G Company had 15,000 shares outstanding, which were trading at $9.70 per share. The following information has been assembled: Current assets Plant assets (net) Current liabilities Long-term debt Common shares Retained earnings Current assets Plant assets (net) Goodwill Investment in K Company Acquisition differential Current liabilities Long-term debt Common shares Retained earnings Carrying Amount $67,500 79,000 $146,500 $ 21,900 24,500 67,000 33,100 $146,500 G Company $ $ Fair Value $57,000 89,000 $ (b) Prepare G Company's consolidated balance sheet immediately after the combination using the worksheet approach and the acquisition method. (Leave no cells blank - be certain to enter "0" wherever required. Values in the first two columns and last column (the…
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Corvus Company has gained control over the operations of Glaive Corporation by acquiring 75% of its outstanding capital stock for P4,650,000. This amount includes a control premium of P225,000. Data from the balance sheets of the two entities included the following amounts as of the date of acquisition: Corvus Company Glaive Corporation Cash 1,012,500 800,000 Accounts Receivable, net 2,770,000 675,000 Inventory 1,600,000 1,200,000 Land 3,000,000 2,400,000 Building 6,750,000 3,400,000 Accumulated Depreciation - Building (1,687,500) (1,700,000) Equipment 800,000 250,000 Accumulated Depreciation…
Need an answer for question B (iv) .