ACC 406 Exam|2025 Revised Update | 100%
Correct Complete Solutions
T/F: a subsidiary can have shareholders other than the parent company.
ueTr
What are the two subtotals we need to allocate total consolidated net income into?
- available to the parent's shareholders
- attributable to the noncontrolling shareholders
What entries are required at the date of acquisition when regarding consolidation with
NCIs?
E and A entries
T/F: Non-controlling interest is always valued on the acquisition date at book value both
with and without control premium.
False, at fair value
How does one deal with a control premium in accounting?
the parent now has acquired a greater than proportional amount of goodwill, so we will have to
divy it up using a table. this is because goodwill is not allocated between the 80/20 ownership
split
T/F: Goodwill is part of the ownership split
False
What 2 things does the C entry do regarding consolidation with NCI after the acquisition?
, 1. eliminates changes in equity investment from dividends and share of income/loss (not new)
2. establishes the non controlling interest accounts
What is the C Journal Entry for with NCI?
DR Income loss from sub
DR consolidated NI attributable to NCI
CR dividends
CR equity investment
CR noncontrolling interest
T/F: The D entry stays the same when there is a noncontrolling interest
True
Which type of sale must get allocated proportionately to the parent and NCI and which all
goes to the parent?
Upstream gets allocated, downstream goes to parent
What three things must the I entries do?
1. recognize the profit we deferred in the previous year. (I cogs)
2. eliminate current-year intercompany sales/purchase transactions (I sales)
3. defer the profit for the current year's sales of inventories (I cogs & I pay)
Which of the three I entry objectives change depending on if sale is upstream or
downstream?
the first objective (I COGS)
Correct Complete Solutions
T/F: a subsidiary can have shareholders other than the parent company.
ueTr
What are the two subtotals we need to allocate total consolidated net income into?
- available to the parent's shareholders
- attributable to the noncontrolling shareholders
What entries are required at the date of acquisition when regarding consolidation with
NCIs?
E and A entries
T/F: Non-controlling interest is always valued on the acquisition date at book value both
with and without control premium.
False, at fair value
How does one deal with a control premium in accounting?
the parent now has acquired a greater than proportional amount of goodwill, so we will have to
divy it up using a table. this is because goodwill is not allocated between the 80/20 ownership
split
T/F: Goodwill is part of the ownership split
False
What 2 things does the C entry do regarding consolidation with NCI after the acquisition?
, 1. eliminates changes in equity investment from dividends and share of income/loss (not new)
2. establishes the non controlling interest accounts
What is the C Journal Entry for with NCI?
DR Income loss from sub
DR consolidated NI attributable to NCI
CR dividends
CR equity investment
CR noncontrolling interest
T/F: The D entry stays the same when there is a noncontrolling interest
True
Which type of sale must get allocated proportionately to the parent and NCI and which all
goes to the parent?
Upstream gets allocated, downstream goes to parent
What three things must the I entries do?
1. recognize the profit we deferred in the previous year. (I cogs)
2. eliminate current-year intercompany sales/purchase transactions (I sales)
3. defer the profit for the current year's sales of inventories (I cogs & I pay)
Which of the three I entry objectives change depending on if sale is upstream or
downstream?
the first objective (I COGS)
