EBK ADVANCED FINANCIAL ACCOUNTING
EBK ADVANCED FINANCIAL ACCOUNTING
12th Edition
ISBN: 9781260165104
Author: Christensen
Publisher: YUZU
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Chapter 5, Problem 5.1.1E
To determine

Concept Introduction:

Consolidation of accounts: When a company acquires significant influence in another company then that company known as holding company. Holding a company is needed to consolidate its accounts with a subsidiary. In consolidation only parent company’s retained earnings are included while doing consolidation.

To choose: The correct option.

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Prepare and compute for the CONSOLIDATED EQUITY at the date of acquisition.
If PROMDI Co., a new company would acquire the net assets of CARDO Co and SYANO Co. PROMDI Co will be issuing 30,000 shares to CARDO and 12,000 shares to SYANO. The following is the balance sheet of PROMDI Co, followed by the fair values and additional unpaid costs incurred by PROMDI in the acquisition: REQUIREMENTS:A. GoodwillB. Consolidated Total Assets at the date of acquisitionC. Consolidated Total Liabilities at the date of acquisitionD. Consolidated Equity at the date of acquisition
The goal of the consolidation process for A. The assets of the non-controlling interest to be predominantly displayed on the balance sheet. B. Asset acquisitions and 100% stock acquisition to result in the same balance sheet. C. Goodwill to appear on the balance sheet of the consolidated entity D. The investment in the subsidiary to be properly valued on the consolidated balance sheet.

Chapter 5 Solutions

EBK ADVANCED FINANCIAL ACCOUNTING

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