Subsequent to Date of Acquisition

It is the portion of the profit or loss and net assets of a subsidiary attributable to equity interests that are not owned directly by the parent.

• Controlling Interest

• Non-controlling Interest

• Subsidiary Interest

• Residual Interest

Which statement is incorrect concerning the preparation of consolidated financial statements?

• The financial statements of the parent and its subsidiaries shall be consolidated on a line-by-line basis by adding together like items of assets, liabilities, equity, income and expenses.

• Intragroup dividends shall be eliminated in full.

• When the reporting dates of the parent and a subsidiary are different, the difference shall be no more than six months.

• Consolidated financial statements shall be prepared using uniform accounting policies for like transactions and other events in similar circumstances.

When an investor uses the cost method to account for investments in subsidiary, cash dividends received by the investor from the investee should normally be recorded as:

• Dividend Income

• An addition to the investor's share of the investee's profit.

• A deduction from the investor's share of the investee's profit.

• A deduction from the investment account

• Ignored

On October 1, X Company acquired for cash all the outstanding ordinary shares of Y Company. Both companies have a December 31 year-end and have been in business for many years. Consolidated net income for the year ended December 31 should include net income of

• X Company for 3 months and Y Company for 3 months

• X Company for 12 months and Y Company for 3 months

• X Company for 3 months and Y Company for 12 months

• X Company for 3 months but no income from Y Company

Which of the following is correct?

• The non-controlling shareholders' claim on the subsidiary's net asset is based on the book value of the subsidiary's net assets

• Only the parent's portion of the differences between book value and fair value of the subsidiary's assets is assigned to those assets

• Goodwill represents the difference between the book value of the subsidiary's net assets and the amount paid by the parent to buy ownership

• Total assets reported by the parent generally will be less than the total assets reported on the consolidated balance sheet

If the non-controlling interest is measured at proportionate share:

• There is goodwill attributable to NCI

• There is no goodwill attributable to NCI

• There is an indirect holding adjustment

• The acquisition will always result to goodwill

A 65%-owned subsidiary company declares and pays a cash dividend. What effect does the dividend have on the retained earnings and non-controlling interest in the consolidated balance sheet?

• No effect on either retained earnings or non-controlling interest

• No effect on retained earnings and a decrease in non-controlling interest

• Decrease in both retained earnings and non-controlling interest

• Decrease in retained earnings and no effect on non-controlling interest

Sun Co. is a wholly owned subsidiary of Star Co. Both companies have separate general ledgers and prepare separate financial statements. Which of the following statements is correct?

• Consolidated financial statements should be prepared by both Star and Sun

• Consolidated financial statements should only be prepared by Star and not by Sun

• Consolidated financial statements should only be prepared by Sun and not by Star

• After consolidation, the accounts of both Star and Sun should incorporate the adjustments in the working paper for future ease in reporting

This is defined as "the financial statements presented by a parent in which the investments are accounted for on the basis of the direct equity interest"

• Consolidated Financial Statements

• Combined Financial Statements

• Single Financial Statements

• Separate Financial Statements

• Independent Financial Statements

The elimination entry for dividends declared by a wholly subsidiary includes a debit entry to

• Dividends

• Dividend Income

• Non-controlling Interest

• Both Dividend and Dividend Income