Question 1

When a subsidiary pays less than book value to acquire the minority interest, the parent's total dollar interest in the subsidiary's net assets at their book value is increased.

Accepted Answer

A) True 
 B)False

Question 2

The purchase method must be used to account for the acquisition of noncontroling interests.

Accepted Answer

A) True 
 B)False

Question 3

Preferred stock of a subsidiary is shown as part of the noncontrolling interest in the consolidated balance sheet.

Accepted Answer

A) True 
 B)False

Question 4

_____ On 1/1/06 Panto acquired 80% of the outstanding common stock of Santo. On that date, Santo had the following equity balances:
 The preferred stock has a call premium of $20,000 and cumulative dividends in arrears of $60,000. The amount to be reported for the noncontrolling interest in a consolidated balance sheet on that date is:

Accepted Answer

A)   $100,000.
B)   $500,000.
C)   $516,000.
D)   $564,000.
E)   None of the above.F) A) and E)
G) A) and D)

Question 5

The traditional allocation method is essentially a part of the equity method.

Accepted Answer

A) True 
 B)False

Question 6

When a parent sells a portion of its common stock holdings in a subsidiary, the accounting issue is whether the Investment account should be updated under the equity method to the date of the disposal.

Accepted Answer

A) True 
 B)False

Exam 11: Changes in a Parents Ownership Interest, Statement of Cash Flows, & Earnings Per Share

When a subsidiary pays less than book value to acquire the minority interest, the parent's total dollar interest in the subsidiary's net assets at their book value is increased.

Correct Answer
verified

When a parent sells a portion of its common stock holdings in a subsidiary, the accounting issue is whether the Investment account should be updated under the equity method to the date of the disposal.

Correct Answer
verified

The traditional allocation method is essentially a part of the equity method.

Correct Answer
verified

The purchase method must be used to account for the acquisition of noncontroling interests.

Correct Answer
verified

Preferred stock of a subsidiary is shown as part of the noncontrolling interest in the consolidated balance sheet.

Correct Answer
verified

Correct Answer
verified

Exam 11: Changes in a Parents Ownership Interest, Statement of Cash Flows, & Earnings Per Share

When a subsidiary pays less than book value to acquire the minority interest, the parent's total dollar interest in the subsidiary's net assets at their book value is increased.

Correct AnswerverifiedShow Answer

When a parent sells a portion of its common stock holdings in a subsidiary, the accounting issue is whether the Investment account should be updated under the equity method to the date of the disposal.

Correct AnswerverifiedShow Answer

The traditional allocation method is essentially a part of the equity method.

Correct AnswerverifiedShow Answer

The purchase method must be used to account for the acquisition of noncontroling interests.

Correct AnswerverifiedShow Answer

Preferred stock of a subsidiary is shown as part of the noncontrolling interest in the consolidated balance sheet.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified