Adv Fin Accting Ch 4

when active trades are unavailable, which of the following are useful techniques for estimating the acquisition date fair value of a non controlling interest when a control premium is likely?

1. comparisons to similar investments 2. discounted future cash flow estimations

when will the acquisition date fair values of the shares owned by the controlling an non controlling interest equal one another?

1. when the per share price paid by the parent is representative of the acquiree's total acquisition date fair value 2. when the parents acquires it shares in the subsidiary without paying a control premium note - alternative valuation can exist even when acquiree shares are not actively traded due to the ability to excercise control over the acquiree with less than 100% stock ownership

which of the following are identified and measured by an acquiring firm as of the date of a 90% subsidiary acquisition.

1. 100% of all subsidiary assets and liabilities at full fair values 2. goodwill or a gain from bargain purchase 3. non controlling interest at acquisition date fair value

for an 80% owned subsidiary accounted for under the equity method, the parent includes in the investment in subsidiary account balance _______________ .

1. a deduction for 80% of subsidiary dividends declared since acquisition 2. 80% of post acquisition subsidiary earnings adjusted for excess acquisition date fair value amortizations

when the parent company employs the initial value method for its investment in subsidiary account, entry ______________ is unnecessary.

D

for financial reporting purposes, the acquisition method views a parent company and its controlled, but less than 100% owned, subsidiary as _____________.

a single economic unit

when the parent company employs the partial equity method for its investment in subsidiary account, consolidation entry asterisk C (*C) is needed to adjust the parent's RE for excess fair value ________________ expenses from the acquisition date to the beginning of the current period.

amortization

when a parent acquires additional shares in its controlled subsidiary from the non controlling interest, any excess of the consolidated book value of these shares over the price paid by the parent is recorded as _____________________ .

an increase in the parent's additional paid in capital

how does consolidation entry A1 allocate the unamortized excess acquisition date fair over book value for the subsidiary's identifiable asset and liabilities to the non controlling interest?

based on the non controlling interest's ownership percentage in the subidiary

the relevant criterion for the requirement to prepare consolidated financial statements is whether one company _______________ the decision making process of another company

control

a parent paid a control premium in acquiring an 80% voting interest in a subsidiary. How is the goodwill from the combination allocated across the controlling and non controlling interests?

controlling and non controlling interest acquisition date fair values are compared to relative fair values of subsidiary's identifiable net assets

following the ________________ __________________ concept, a parent includes 100% of a subsidiary's net income in consolidated net income even when the parent owns less than 100% of its controlled subsidiary's voting stock.

economic unit

at the date of a business acquisition, the parent values any non controlling interest shares at _____________ value.

fair

when the sum of the acquisition date fair values of the controlling and non controlling interests exceeds the collective acquisition date fair values of the subsidiary's identifiable net assets, then the acquiring company recognizes ________________

goodwill

when a parent pay a control premium is a less than 100% acquisition, ______________________________ .

more goodwill will be allocated to the parent than to the non non controlling interest relative to their proportionate ownership percentages

consolidated net income attributable to the parent company owners may be computed as consolidated net income less net income attributable to the ___________ _______________ .

non controlling interest

in exhibit 4.6, the amount of net income that is included in the 12/31 consolidated retained earnings balance is the net income attributable to ___________________ company

parent

on a consolidation worksheet, the non controlling interest's share of subsidiary dividends declared ____________________

serve to reduce the non controlling interest balance

on a consolidation worksheet, the non controlling interest's share of subsidiary dividends declared ______________________________ .

serve to reduce the non controlling interest balance

the amount for the non controlling interest is reported in the consolidated balance sheet in the ___________.

shareholders' equity section

for most cases, the best measure of a non controlling interest's acquisition date fair value is ___________________________ .

the market price of the non controlling shares surrounding the date of an acquisition

why does measuring the acquisition date fair value of a non controlling interest require estimation?

the non controlling interest shares were neither bought nor sold as part of the acquisition

consolidation entry D represents part of a sequence of worksheet entries that bring the investment in subsidiary account to a _________________ balance

zero

consolidation entry I represents part of a sequence of worksheet entries that bring the investment in subsidiary account to a _____________ balance

zero

which of the following are included in the calculation of Pawn Company's end of year 20% non controlling interest when the parent has paid a control premium?

1. current year net income allocation to the non controlling interest 2. 20% of the subsidiary's beginning of year book value 3. 20% of the excess fair value allocation for the subsidiary's beginning of year identifiable net assets

which of the following identify where non controlling interest amounts appear in consolidated financial statements?

1. in the consolidated owners' equity section 2. in the consolidated income statement as an allocation of consolidated net income

when the fair values of the subsidiary shares owned by the controlling and non controlling interests are equal at acquisition date, then _______________________.

1. any resulting goodwill will be recognized proportionately across the two ownership groups 2. the parent has not paid a control premium for its proportional interest

the allocation of goodwill across the controlling and non controlling interests ___________

1. compares acquisition date total fair values to the relative (proportional) fair values of the subsidiary's identifiable net assets 2. does not always result in an allocation proportional to percentage ownership interests

the allocation of goodwill across the controlling and non controlling interests ____________.

1. compares acquisition date total fair values to the relative (proportional) fair values of the subsidiary's net assets 2. does not always result in an allocation proportional to percentage ownership interests

the beginning balance of the non controlling interest (NCI) can be viewed as the NCI's ownership multiplied by the sum of which of the following two components?

1. the book value of the subsidiary as of the beginning of the period 2. the unamortized excess acquisition date subsidiary fair over book value as of the beginning of the period

comparing the textbook exhibits 4.6 and 4.8, which consolidated statement amounts change with the presence of a control premium paid by the parent in its acquisition of the subsidiary?

1. current assets (cash) 2. goodwill

a parent company owns 80% of the voting stock of a subsidiary. What percentage of the total excess fair value net adjustment should consolidation entry A allocate to the non controlling interest?

20%

a parent company owns 80% of the voting stock of a subsidiary. what percentage of the subsidiary's net income (after excess acquisition date fair value amortizations) is attributable to the non controlling interest?

20%

when active trades are unavailable, which of the following are useful techniques for estimating the acquisition date fair value of a non controlling interest when a control premium is likely?

1. comparison to similar investments 2. discounted future cash flow estimations note - because a control premium is likely, the parent's price paid will not be indicative of the fair value of the non controlling interest shares