ABC Inc. owns 75% of XYZ Co. The subsidiary company declares and pays a cash dividend....
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ABC Inc. owns 75% of XYZ Co. The subsidiary company declares and pays a cash dividend. What effect does the dividend have on the retained earnings and noncontrolling interest balances on the parent company's consolidated balance sheet?
a. Decreases both the consolidated retained earnings and the noncontrolling interest balances.
b. No effect on either retained earnings or noncontrolling interest.
c. No effect on consolidated retained earnings, but decreases noncontrolling interest.
d. Decreases retained earnings, but no impact on noncontrolling interest.
Homework Answers
C) No effect on consolidated retained earnings , but decreases noncontrolling interest .
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ABC Inc. owns 75% of XYZ Co. The subsidiary company declares and
pays a cash dividend....
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Assume that on 1/1/X0, a parent company acquires a 70% interest in its subsidiary for a price at ...
Assume that on 1/1/X0, a parent company acquires a 70% interest
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excess is assigned as follows:
Asset
Fair Value
Useful Life
Patent
$320,000
8 years
Goodwill
160,000
Indefinite
70% of the goodwill is allocated to the parent.
Included in the attached Excel spreadsheet are the
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Prepare the consolidated financial statements at 12/31/X6 by
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Assume that on 1/1/X0, a parent company acquires a 70% interest
in its subsidiary for a price at $480,000 over book value. The
excess is assigned as follows:
Asset
Fair Value
Useful Life
Patent
$320,000
8 years
Goodwill
160,000
Indefinite
70% of the goodwill is allocated to the parent.
Included in the attached Excel spreadsheet are the
pre-consolidation financial statements for both the parent and the
subsidiary.
Submission Requirements:
Prepare the consolidated financial statements at 12/31/X6 by
placing the appropriate...
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consisted of $120,000 common stock and $60,000 retained earnings.
This implied that the total fair value of Sub co is $220,000
($176,000 / 80%). The company assigned the $40,000 excess fair
value to previously unrecorded patents with a 10-year useful
life.
Parent Co’s $36,800 income from Sub Co for 2018 consisted of 80%
of Sub Co’s $50,000...
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