answer quickly Which statement is true regarding consolidation when there is a noncontrolling interest?Consolidated fınancial statements should be prepared only if the parent company and the subsidiary do business in a similar area.Only a proportion of the subsidiary should be included in the consolidated financial statements because the parent company has less than 100% of the subsidiary's shares.Noncontrolling interest should not be included in the consolidated financial statements because these outside owners do not have shares in the parent company.A subsidiary should be included in its entirety in the consolidated financial statements.O 000

When a company is holding shares of a company of more than 50% of outstanding share . Then the…

Answered: Which statement is true regarding…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of the following is incorrect regarding consolidated financial statements? A. Consolidation involves adding similar assets, liabilities, income and expenses of the parent and its subsidiaries.B. The subsidiary’s equity is eliminated and replaced with non-controlling interest.C. A parent is exempt from consolidation if it is in itself a subsidiary, its securities are not traded, and its parent produce PFRS consolidated financial statements.D. The consolidated profit pertains only to the parent.
What is a basic premise of the acquisition method regarding accounting for a noncontrolling interest?a. Consolidated financial statements should be primarily for the benefit of the parent company’s stockholders.b. Consolidated financial statements should be produced only if both the parent and the subsidiary are in the same basic industry.c. A subsidiary is an indivisible part of a business combination and should be included in its entirety regardless of the degree of ownership.d. Consolidated financial statements should not report a noncontrolling interest balance because these outside owners do not hold stock in the parent company.
Choose the correct. What is a basic premise of the acquisition method regarding accounting for noncontrolling interest?a. Consolidated financial statements should be primarily for the benefit of the parent company’s stockholders.b. Consolidated financial statements should be produced only if both the parent and the subsidiary are in the same basic industry.c. A subsidiary is an indivisible part of a business combination and should be included in its entirety regardless of the degree of ownership.d. Consolidated financial statements should not report a noncontrolling interest balance because these outside owners do not hold stock in the parent company.
Where are only a proportion of a subsidiary's shares owned by a parent entity? What proportion of the intragroup transactions between the parent entity and the subsidiary will need to be eliminated on consolidation?
Where the parent company does not hold 100 percent equity of the subsidiary company, what portion of the intra-group transactions between the parent entity and the subsidiary entity will need to be eliminated on consolidation? What is a non-controlling interest, and how should it be disclosed? How are non-controlling interests affected by intra-group transactions? What are the three steps we use to calculate total non-controlling interest?
Choose the correct. A company acquires a subsidiary and will prepare consolidated financial statements for external reporting purposes. For internal reporting purposes, the company has decided to apply the equity method. Why might the company have made this decision?a. It is a relatively easy method to apply.b. Operating results appearing on the parent’s financial records reflect consolidated totals.c. GAAP now requires the use of this particular method for internal reporting purposes.d. Consolidation is not required when the parent uses the equity method.
(a) Where the parent company does not hold 100 percent equity of the subsidiary company, what portion of the intra-group transactions between the parent entity and the subsidiary entity will need to be eliminated on consolidation? (b) What is a non-controlling interest, and how should it be disclosed? (c) How are non-controlling interests affected by intra-group transactions? (d) What are the three steps we use to calculate total non-controlling interest? Show working
Choose the correct. The noncontrolling interest represents an outside ownership in a subsidiary that is not attributable to the parent company. Where in the consolidated balance sheet is this outside ownership interest recognized?a. In the liability section.b. In a mezzanine section between liabilities and owners’ equity.c. In the owners’ equity section.d. The noncontrolling interest is not recognized in the consolidated balance sheet.
General questions Under GAAP, a parent company should exclude a subsidiary from consolidation if: It measures income from the subsidiary under the equity method The subsidiary is in a regulated industry The subsidiary is a foreign entity whose books are recorded in a foreign currency The parent does not have control of the subsidiary The FASB’s primary motivation for requiring consolidation of all majority-owned subsidiaries was to: Ensure disclosure of all loss contingencies Prevent the use of off–balance sheet financing Improve comparability of the statements of cash flows Establish criteria for exclusion of finance and insurance subsidiaries from consolidation
Which of the following is not true with regard to a business combination accomplished in the form of a stock acquisition? a. Two companies remain in existence after the combination b. A parent-subsidiary relationship is said to exist c. Consolidated financial statements are normally required d. All of the above statements are true
The noncontrolling interest represents an outside ownership in a subsidiary that is not attributable to the parent company. Where in the consolidated balance sheet is this outside ownership interest recognized?a. In the liability section.b. In a mezzanine section between liabilities and owners’ equity.c. In the owners’ equity section.d. The noncontrolling interest is not recognized in the consolidated balance sheet.
Where the parent company does not hold 100 percent equity of the subsidiary company, what portion of the intra-group transactions between the parent entity and the subsidiary entity will need to be eliminated on consolidation? What is a non-controlling interest, and how should it be disclosed? How are non-controlling interests affected by intra-group transactions? What are the three steps we use to calculate total non-controlling interest? answer all the points with refrence. This is a full question. Thanks

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