Consolidation Worksheet Preparation
The newest clerk in the accounting office recently entered trial balance data for the parent company and its subsidiaries in the company’s consolidation program. After a few minutes of additional work needed to eliminate the intercompany investment account balances, he expressed his satisfaction at having completed the consolidation worksheet for 20X5. In reviewing the printout of the consolidation worksheet, other employees raised several questions, and you are asked to respond.
Required
Indicate whether each of the following questions can be answered by looking at the data in the consolidation worksheet (indicate why or why not):
a. Is it possible to tell if the parent is using the equity method in recording its ownership of each subsidiary?
b. Is it possible to tell if the correct amount of consolidated net income has been reported?
c. One of the employees thought the parent company had paid well above the fair value of net assets for a subsidiary purchased on January 1, 20X5. Is it possible to tell by reviewing the consolidation worksheet?
d. Is it possible to determine from the worksheet the percentage ownership of a subsidiary held by the parent?
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