Chapter 4 Learnsmart

What is included in the calculation of the ending balance of the NCI?

1. Consolidated entity net income attributable to the NCI 2. Balance of the NCI as of the beginning of the period 3. Dividends from the subsidiary attributable to the NCI

Which are the following identify where NCI amounts appear in consolidated F/S

1. Consolidated income stmt as an allocation of consolidated net income 2. In the consolidated owner's equity section

What is included in the calculation of Pawns Company end-of-year 20% non-controlling interest when the parent has paid a control premium?

1. Current year net income allocation to the NCI 2. 20% of the excess FV allocation for the sub beginning of year identifiable net assets 3. 20% of subsidiary's beg of year BV

When a parent acquires a controlling but less than 100% interest in a subsidiary the basic elements for establishing an acquisition date subsidiary value include

1. FV of NCI 2.FV of controlling interest

What amounts comprise the ending balance of the non-controlling interest reported in the stockholders equity section of the consolidated balance sheet?

1. Net income attributable to the NCI 2. Subsidiary dividends attributable to the NCI 3. The NCI beginning of the year balance

In periods subsequent to an acquisition, how is consolidated net income generally computed in the presence of a 20% non-controlling interest?

100% of the parents net income + 100% of subsidiary net income ADJUSTED for excess acquisition-date FV amortization

Computation of the NCI shares of consolidated net income includes

1. Adjustment for the NCI shares of excess acquisition date FV allocation amortization 2. NCI proportional ownership of the subsidiary net income

Why are two separate consolidation entries (a1/2) useful when the parent has paid a control premium for its controlling, but partial interest in a subsidiary?

1. Because the unamortized acquisition date excess FV are allocated proportionately across ownership interest 2. Because the presence of a control premium affects primarily the parent shares 3. Because goodwill is not allocated proportionately across the ownership interest

Beginning balance of the NCI can be viewed as the NCI ownership shared times the sum of

1. book value of the subsidiary as the beg of the period 2. Unamortized excess acquisition-date FV over BV as of the beg of the period

Consolidation Entry A2 is required when

Goodwill is disproportionately allocated to the parent and non-controlling ownership

Regardless of whether a parent obtains control in a single or multiple steps, the subsidiary assets and liabilities are revalued in the entirety to FV at the date control is obtained (t/f)

TRUE

Why does measuring the acquisition date FV of a non-controlling interest require estimation?

The non-controlling interest shares were neither bought or sold as part of the acquisition

A non-controlling interest in a consolidated entity may be described as

an ownership interest in a subsidiary held by owners other than the parent company

The allocation of goodwill across the controlling and non-controlling interests

does not always result in an allocation proportional to % ownership interest

The value of any NCI shares at

fair value

Consolidation Entry D

represents part of a sequence of worksheet entries that bring the investment in Subsidiary account to a zero balance

Consolidation worksheet, the NCI shares of subsidiary dividends declared

serve to reduce the NCI balance

Amount for the NCI is reported in the consolidate balance sheet in the

shareholders equity section

A parent company owns 80% of the voting stock what % of the total beginning subsidiary equity elimination should Consolidate Entry S allocate to the NCI ?

20%

Parent company owns 80% of voting stock of a subsidiary. What % of the sub net income is attributable to the NCI

20%

Parent company owns 80% of voting stock of a subsidiary. Consolidation Entry D, what % of the subsidiary balance in its dividends declared account should be eliminated?

80%

A parent company owns 80% of voting stock of a subsidiary. What % of the subsidiary revenue and expenses are consolidated?

100% should be consolidated *economic unit concept views parent and subsid. as a single economic unit. Parent must consolidate 100% of sub financial info