When the parent acquires 51% of a subsidiary U.S. corporation, the subsidiary can join the consolidated...
When the parent acquires 51% of a subsidiary U.S. corporation, the subsidiary can join the consolidated financial statements and the consolidated tax return of the parent. True or False?
Homework Answers
Answer) True
Rule
810-10-15-8
The usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree.
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When the parent acquires 51% of a subsidiary U.S. corporation,
the subsidiary can join the consolidated...
Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the comparability...
Preparation of consolidated financial statements when a parent-subsidiary relationship exists is an example of the comparability characteristic. economic entity assumption. neutrality characteristic. relevance characteristic.
In regard to preparing consolidated financial statements for a subsidiary and parent company, when considering the...
In regard to preparing consolidated financial statements for a subsidiary and parent company, when considering the amount of inventory to defer or recognize in an upstream or downstream sale, does the percentage of the amount still in inventory at the end of each period become a factor? If so, in what respect?
1. A company acquires a subsidiary and will prepare consolidated financial statements for extemal reporting purposes....
1. A company acquires a subsidiary and will prepare consolidated financial statements for extemal reporting purposes. For internal reporting purposes, the company has decided to apply the initial value method, Why might the company have made this decision? a. It is a relatively easy method to apply. 5. Operating results appearing on the parent's financial records rellect consolidated totals. c. GAAP now requires the use of this particular method for internal reporting purposes. d. Consolidation is not required when the...
3. Consolidated Balances (35 points) Parent Company acquires a subsidiary by issuing 100,000 common shares with...
3. Consolidated Balances (35 points) Parent Company acquires a subsidiary by issuing 100,000 common shares with a market value of $25 per share for all of the subsidiary's common stock. The subsidiary's assets and liabilities were recorded at fair values with the exception of equipment undervalued by $225,000. In addition, there were two unrecorded assets: a trademark valued at $175,000 and a customer list valued by the subsidiary at $60,000. The balance sheets of the parent and subsidiary immediately after...
A subsidiary issues bonds. The parent can then acquire the bonds either directly from the subsidiary...
A subsidiary issues bonds. The parent can then acquire the bonds either directly from the subsidiary or from a nonaffiliate that had originally acquired the subsidiary's bonds. a) Discuss the parent's accounting as it relates to the preparation of consolidated financial statements, for their acquisition of the bonds: 1. from the nonaffiliate. 2. directly from the subsidiary. b) Why does it matter who the bonds are acquired from?
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
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...
Parent and Subsidiary Corporations form an affiliated group. In 2018, the initial year of operation, Parent...
Parent and Subsidiary Corporations form an affiliated group. In 2018, the initial year of operation, Parent and Subsidiary filed separate returns. In 2019, the group files a consolidated tax return. The results for 2018 and 2019 are: Taxable Income 2018 2019 Parent ($10,000) $50,000 Subsidiary 30,000 (25,000) How much of Subsidiary's loss can be carried back to last year?
Below is the equity section of the consolidated worksheet between a parent and its subsidiary Parent...
Below is the equity section of the consolidated worksheet between a parent and its subsidiary Parent Subsidiary Accounts Payable 1,584 668 Long-term Debt 3,264 1,314 Common Stock 4,285 1,695 Retained Earnings 6,621 4,619 Here is the separate income and dividends paid during the year Separate Net Income Dividends Declared Parent 7,836 2,467 Subsidiary 2,118 881 When the consolidation entry is prepared the debit to Retained Earnings will be $____
48. Bonnie and Clyde Corporations have filed consolidated returns for several calendar years. Bonnie acquires land...
48. Bonnie and Clyde Corporations have filed consolidated returns for several calendar years. Bonnie acquires land for $75,000 on January 1 of last year. On August 1 of this year, Bonnie sells the land to Clyde for $100,000. The basis and holding period for the land acquired by Clyde are: A) Basis $75,000 Holding Period Begins On January 2 of last year B) Basis $100,000 Holding Period Begins On January 2 of last year C) On Holding Period Begins Basis...
1) Which of the following statements is not true with respect to consolidated financial statements? A)...
1) Which of the following statements is not true with respect to consolidated financial statements? A) Consolidated financial statements should be prepared using uniform accounting policies. B) Consolidated statements should include the consolidated cash flow statement. C) Investment in an associate company is accounted for using the equity method of accounting. D) During a financial year if a parent company loses ‘control’ of a subsidiary company, the consolidated statement of comprehensive income should not include the profit or loss of...
1. A company acquires a subsidiary and will prepare consolidated financial statements for extemal reporting purposes. For internal reporting purposes, the company has decided to apply the initial value method, Why might the company have made this decision? a. It is a relatively easy method to apply. 5. Operating results appearing on the parent's financial records rellect consolidated totals. c. GAAP now requires the use of this particular method for internal reporting purposes. d. Consolidation is not required when the...
3. Consolidated Balances (35 points) Parent Company acquires a subsidiary by issuing 100,000 common shares with a market value of $25 per share for all of the subsidiary's common stock. The subsidiary's assets and liabilities were recorded at fair values with the exception of equipment undervalued by $225,000. In addition, there were two unrecorded assets: a trademark valued at $175,000 and a customer list valued by the subsidiary at $60,000. The balance sheets of the parent and subsidiary immediately after...
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...
48. Bonnie and Clyde Corporations have filed consolidated returns for several calendar years. Bonnie acquires land for $75,000 on January 1 of last year. On August 1 of this year, Bonnie sells the land to Clyde for $100,000. The basis and holding period for the land acquired by Clyde are: A) Basis $75,000 Holding Period Begins On January 2 of last year B) Basis $100,000 Holding Period Begins On January 2 of last year C) On Holding Period Begins Basis...
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