CH 4

In periods subsequent to acquisition, noncontrolling (NCI) interest valuation in consolidation financial reports is based on

acquisition-date fair value adjusted for the NCI's share of post-acquisition adjusted subsidiary net income less dividends

When the parent company employes the partial equity method for its Investment in Subsidiary account, Consolidation Entry *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 the collective acquisition-date fair values of the subsidiary's identifiable net assets exceeds the sum of the acquisition-date fair values of the controlling and non-controlling interests, then the acquiring company recognizes a gain on ___________ ___________

bargain purchase

The combined credits to the noncontrolling interests in Consolidation Entries S and A equal the total balance of the NCI as of the ___________ of the period

beginning

Which of the following are included in the calculation of Pawn Company's end of year noncontrolling interest when the parent has paid a control premium?

- Current year net income allocation to the noncontrolling interest - 20% of the subsidiary's beginning of year book value - 20% of the excess fair value allocation for the subsidiary's beginning of year identifiable net assets

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

- 100% of all subsidiary assets and liabilities at full values - Non controlling interest @ acquisition-date fair value - Goodwill or a gain from bargain purchase

Why are two seperate consolidation entries (A1 & A2) useful when the parent has paid a control premium for its controlling, but partial interest in a subsidiary?

- Because the presence of a control premium affects primarily the parent shares - Because goodwill is not allocated proportionately across the ownership interests - Because the unamortized acquisition-date excess fair values are allocated proportionately across ownership interests

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

- The book value of the subsidiary as of the beginning of the period - The unamortized excess acquisition-date subsidiary fair over book value as of the beginning of the period

The allocation of goodwill across the controlling and noncontrolling interests

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

Which of the following identify where noncontrolling interest amounts appear in consolidated financial statements?

- in the consolidated income statement as an allocation of consolidated net income - in the consolidated owner's equity section

For a year-end consolidation for a midyear acquisition, the subsidiary often submits accounts that include results for the entire fiscal year. In such cases, Consolidation Entry S must be expanded to include adjustments for

- subsidiary pre-acquisition dividends declared - subsidiary pre-acquisition revenues - subsidiary pre-acquisition expenses

As part of the consolidation process which of the following are included in the calculation of the ending balance of the noncontrolling interest?

- the consolidated entity's net income attributable to the NCI - dividends from the subsidiary attributable to the NCI - the balance of the NCI as of the beginning of the period

When will the acquisition-date fair values of the shares owned by the controlling and NCI equal one another?

- when the per share price paid by the parent is representative of the acquiree's total acquisition-date fair value - when the parents acquires its shares in the subsidiary without paying a control premium

A parent company owns 80% of voting stock of a subsidiary. In Consolidation Entry I, what % of the parent's balance in Equity in Subsidiary Earnings account should be eliminated?

100%

Consolidation Entry A2 focuses on valuation and allocation of which of the following:

Goodwill only

In periods subsequent to acquisition, NCI valuation in consolidated financial reports is based on

acquisition-date fair value adjusted for the NCI's share of post-acquisition adjusted subsidiary net income less dividends

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

controls

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 noncontrolling interest shares at _______ value.

fair

When a parent pays a control premium in a less than 100% acquisition,

more goodwill will be allocated to the parent than to the noncontrolling interest relative to their proportionate ownership %

A parent company owns 80% of the voting stock of a subsidiary. What % of the total beginning subsidiary's stockholders' equity elimination should Consolidaation Entry S allocate to the NCI?

20%

A parent company owns 80% of the voting stock of a subsidiary. What % of the total excess fair value net adnustment should Consolidation Entry A allocate to the noncontrolling interest?

20%

A parent company owns 80% of the voting stock of a subsidiary. In Consolidation Entry D, what percentage of the subsidiary's balance in its Dividends Declared account should be eliminated?

80%

When a business acquisition resulting in control takes place midyear, how is the consolidation process affected?

- Only post-acquisition subsidiary revenues are included in consolidated totals - Only post-acquisition subsidiary expenses are included in consolidated totals - Subsidiary book value must be computed as of the acquisition date

Consolidation Entry S eliminates 100% of the subsidiary's beginning of the year period stockholders' equity accounts. in the presence of a noncontrolling interest, to what accounts is the total elimination allocated?

- the noncontrolling interest - the investment in subsidiary