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Which of the following is the best approach to B) Use the market trading prices of the outstanding subsidiary shares (not
determine the fair value of the non- owned by the
controlling interest under the fair value enterprise parent) a few weeks before and after the acquisition
method?
A) Use the trading price of shares of a comparable
company in an active market.
B) Use the market trading prices of the outstanding
subsidiary shares (not owned by the
parent) a few weeks before and after the acquisition.
C) Use a valuation model based on the subsidiary's
residual income projections.
D) Use the share price paid by the parent.
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On the date of acquisition, consolidated retained C) the parent's shareholders' equity.
earnings and consolidated common
shares in shareholders' equity are equal to:
A) the sum of the parent and subsidiary's shareholders'
equity.
B) the sum of the parent's shareholders' equity plus its
pro-rata share of the subsidiary's
shareholders' equity.
C) the parent's shareholders' equity.
D) the subsidiary's shareholders' equity.
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A Co. has acquired an 80% controlling interest in B Co. D) the parent's pro-rata share of the assets and liabilities of the subsidiary at
If using the proportionate fair market
consolidation method, the consolidated balance sheet
on the date of acquisition, will contain:
A) the parent's pro-rata share of the assets and
liabilities of the subsidiary at book value.
B) 100% of the assets and liabilities of the subsidiary at
fair market value.
C) 100% of the assets and liabilities of the subsidiary at
book value.
D) the parent's pro-rata share of the assets and
liabilities of the subsidiary at fair market
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