Advanced Accounting - Standalone book
12th Edition
ISBN: 9780077862220
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
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Chapter 6, Problem 4P
To determine
Identify the appropriate answer for the given statement from the given choices.
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parent acquires all of a subsidiary’s common stock and 60 percent of its preferred stock. The preferred stock has a cumulative dividend. No dividends are in arrears. How is the noncontrolling interest in the subsidiary’s net income assigned?
Multiple Choice
The noncontrolling interest in consolidated net income is assigned as 40 percent of the value of the preferred stock, based on an allocation between common stock and preferred stock.
There is no allocation to the noncontrolling interest because the parent owns 100% of the common stock and net income belongs to the controlling interest.
The noncontrolling interest in consolidated net income is assigned as 40 percent of the preferred stock dividends.
The noncontrolling interest in consolidated net income is assigned as 40 percent of the subsidiary’s income after subtracting preferred stock dividends.
The noncontrolling interest in consolidated net income is assigned as 40 percent of the subsidiary’s income before preferred stock…
1. On January 1, 20x1, Entity A acquires 30% interest in Entity B
d. Entity A should not apply the equity method.
amount of the investment in associate on December 31, 20x2?
interest in Entity B. Entity B reports profit of 94M for the
amount of the investment in associate on December 31, 20x1?
dividends of P50,000 in 20x1. How much is the carrying
P200,000 and declares no dividends. What is the carrying
2. Entity A uses the equity method in accounting for its 20%
period. Entity B has outstanding 5% cumulative preference
for P600,000. Entity B reports profit of P200,000 and declares
of P300,000 at year-end. In 20x2, Entity B reports loss of
PAS 28
319
ned to exist
a. 550,000
b. 590,000
c. 600,000
d. 640,000
vestee.
vestee.
avestee.
stee's board
c. 645,000
Under this
ce is initially
600,000
a.
d. 630,000
b. 660,000
ement
e investor's
nges in
chares with an aggregate par value of P10M. Entity A holds
none of the preference shares. Entity B did not declare
dividends on the preference…
A wholly owned subsidiary declared dividend and half remains unpaid bythe end of the year, which of the following is TRUE?
a. Only half of the amount of the dividend will be used to reduce the profit ofthe parent for consolidation purposes.
b. The total amount of the dividend will be eliminated in the working paperelimination entry by debiting “dividend revenue” account.c. The transaction will have an impact in the computation of the balance ofNCI at the end.d. The elimination entry will include a debit to non-controlling interest for theamount of dividend received by the non-controlling shareholders.
Chapter 6 Solutions
Advanced Accounting - Standalone book
Ch. 6 - Prob. 1QCh. 6 - Prob. 2QCh. 6 - When is a firm required to consolidate the...Ch. 6 - Prob. 4QCh. 6 - Prob. 5QCh. 6 - Prob. 6QCh. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - Prob. 9QCh. 6 - Prob. 10Q
Ch. 6 - Prob. 11QCh. 6 - How do noncontrolling interest balances affect the...Ch. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 16QCh. 6 - Prob. 17QCh. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Prob. 7PCh. 6 - Bens man Corporation is computing EPS. One of its...Ch. 6 - Prob. 9PCh. 6 - Prob. 10PCh. 6 - Prob. 11PCh. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - On January 1, Coldwater Company has a net book...Ch. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 20PCh. 6 - Prob. 21PCh. 6 - Prob. 22PCh. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - Prob. 25PCh. 6 - Prob. 26PCh. 6 - Prob. 27PCh. 6 - Prob. 28PCh. 6 - Prob. 29PCh. 6 - Prob. 30PCh. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Prob. 34PCh. 6 - Prob. 35PCh. 6 - Prob. 36PCh. 6 - Prob. 37PCh. 6 - Prob. 38PCh. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42PCh. 6 - Prob. 43PCh. 6 - Prob. 44PCh. 6 - Prob. 45PCh. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 1DYSCh. 6 - Prob. 2DYSCh. 6 - The FASB ASC Subtopic Variable Interest Entities...
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Similar questions
- PROBLEM IV. On January 2, 2019, Klaus Company (qualified as SME) acquired 80% interest in Marcel Company for P4,125,000 cash. On this date, the outstanding ordinary share capital and accumulated profits of Klaus Company and Marcel Company are as follows: Klaus Marcel Ordinary share capital P 2,250,000 P 1,312,000 Share premium 1,750,000 Accumulated profits (losses) 5,520,000 3,187,500 There was no issuance of ordinary shares during the year. Fair value of the following assets of Marcel exceeded their book values as follows: Inventories, P210,000; Property and equipment (useful life, 10 years), P127,500. All other assets and liabilities are fairly valued. On December 31, 2019, the two companies reported the following operating results: Klaus Marcel Net income P 1,825,000 P 975,000 Dividends paid 525,000 262,500 1. Consolidated shareholders' equity reported in the consolidated statement of financial position on 12/31/19arrow_forwardREQUIRED: What is the amount of income attributable to the non-controlling interest in 20x1 if the non-controlling interest is to be stated at fair value?arrow_forwardTRUE OR FALSE: Indicate whether the statements are true or false. 1. Assuming the parent acquired 100 percent of the subsidiary’s stock and there are no purchase differentials, the investment income recorded by the parent in the current period will equal the subsidiary’s current net income recognized subsequent to the acquisition date. 2.arrow_forward
- 3. Set out below are the draft income statements of P and its subsidiary S for the year ended 31 December 20X7. On the 1 January 20X6 P purchased 75% of the ordinary shares in S. Revenue Cost of sales and expenses Gross profit Operating expenses Profit from operations Finance costs Profit before taxation Tax Profit for the year P $000 300 (180) 120 (47) 73 73 (25) 48 S $000 150 (70) 80 P values non-controlling interest using the fair value method. (23) 57 (2) 55 (16) 39 During the year S sold goods to P for $20,000, making a mark up of one third. Only 20% of these goods were sold before the end of the year, the rest were still in inventory. Prepare the consolidated income statement for the year ended 31 December 20X7arrow_forwardWhich of the following is a correct statement pertaining to consolidation of a subsidiary with preferred shares? O a. When preferred shares are cumulative, the preferred shareholders are only entitled to income equal to the yearly dividend, if the company has not suffered a loss for the year. O b. If the preferred shares are cumulative, the current year's net income would be allocated to the preferred shares only if dividends are declared in the year. O c. If the preferred shares are non-cumulative, the current year's net income would only be allocated to preferred shares if preferred dividends are declared. O d. If the preferred shares are non-cumulative, the current year's net income would be allocated to the preferred shares whether or not preferred dividends are declareD.arrow_forwardam.103.arrow_forward
- 1 On January 1, Belleville Company paid $1,710,000 to acquire 57,000 shares of O'Fallon's voting common stock, which represents a 40 percent investment. No allocations to goodwill or other specific accounts were made. Significant influence over O'Fallon is achieved by this acquisition, and so Belleville applies the equity method. O'Fallon declared a $3 per share dividend during the year and reported net income of $590,000. What is the balance in the Investment in O'Fallon account found in Belleville's financial records as of December 31? Skipped References Multiple Choice O $1,946,000. $1,775,000. $1,895,000. $1,835,000.arrow_forwardHow much is the balance of "investment in associate" at the end current year?arrow_forwardHow much is the Profit attributable to equity holders of parent (Parent’s Interests/Controlling Interest in Profit) for 20x1:A. 356,500 C. 363,075B. 362,200 D. 386,500arrow_forward
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