Question

In: Accounting

In three paragraphs, please explain what happens when a parent company ceases to consolidate a subsidiary.

In three paragraphs, please explain what happens when a parent company ceases to consolidate a subsidiary.

Solutions

Expert Solution

At the point when the size of the minority enthusiasm for the subsidiary company is under half ownership of the outstanding shares, the association will by and large stop to be a subsidiary of the parent.

There are two unique circumstances where isolate financial statements are pertinent to venture elements.

The main circumstance is the place entity controls contributed backups however none of these auxiliaries is required to be consolidated; at the end of the day, it doesn't control any backups that give venture related administrations. In such a circumstance, it will quantify the majority of its auxiliaries at reasonable incentive through benefit or misfortune, and it will display isolate financial statements as its exclusive financial statements.

Then again, entity may be a speculation entity that has some investee auxiliaries that are represented at reasonable incentive through benefit or misfortune, and different backups that give venture related administrations and which are consolidated. For this situation, it will get ready consolidated financial statements . In these consolidated financial statements, the auxiliaries giving speculation related administrations are consolidated and different investees are estimated at reasonable incentive through benefit or misfortune. The entity may likewise be required to plan isolate financial statements. In those different financial statements, it must record for the auxiliaries that are estimated at reasonable incentive through benefit or misfortune in its consolidated financial statements similarly as in its different financial statements.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

2.   What happens when a company tries to consolidate a foreign subsidiary’s financial statements into its...
2.   What happens when a company tries to consolidate a foreign subsidiary’s financial statements into its own? What kind of rules should it follow in consolidated financial statements involving foreign subsidiary’s operations under IFRS? (10%)
What happens when a company tries to consolidate a foreign subsidiary’s financial statements into its own?...
What happens when a company tries to consolidate a foreign subsidiary’s financial statements into its own? What kind of rules should it follow in consolidated financial statements involving foreign subsidiary’s operations under IFRS?
When a parent company looks to purchase a subsidiary, there are many ways to fund the...
When a parent company looks to purchase a subsidiary, there are many ways to fund the purchase. The two most popular ways to pay for the new acquisition are: (1) To give the subsidiary cash for its acquisition, and (2) To give the subsidiary ownership percentage within the parent. Based on these facts, answer the following questions: Under which circumstance would you use each of these methods? Under what set of circumstances is each method most beneficial to the subsidiary?...
What is parent company, subsidiary, non controlling interest in consolidated?
What is parent company, subsidiary, non controlling interest in consolidated?
When a parent company requires its wholly owned subsidiary to use “push-down” accounting, the subsidiary records...
When a parent company requires its wholly owned subsidiary to use “push-down” accounting, the subsidiary records an account called re-evaluated capital. This account represents    a. the increase in fair market value and goodwill components of the parent’s purchase price.    b. the ending balance of the investment account on the parent’s books using the equity method.    c. the increase in fair market value of the subsidiary’s stock as a result of the purchase. d. the new owners’ equity...
When valuing a parent company that owns less than 100 percent of a subsidiary, the minority...
When valuing a parent company that owns less than 100 percent of a subsidiary, the minority interest holder of the subsidiary has a claim on the parent company’s assets. A. True B. False
Assume that a parent company owns 80 percent of its subsidiary. The parent company uses the...
Assume that a parent company owns 80 percent of its subsidiary. The parent company uses the equity method to account for its investment in subsidiary. On January 1, 2012, the parent company issued to an unaffiliated company $1,000,000 (face value) 10 year, 10 percent bond payable for a $61,000 premium. The bonds pay interest in December 31 of each year. On January 1, 2015, the subsidiary acquired 40 percent of the bonds for $386,000. Both companies use straight-line amortization. In...
Assume that a parent company owns 80 percent of its subsidiary. The parent company uses the...
Assume that a parent company owns 80 percent of its subsidiary. The parent company uses the equity method to account for its investment in subsidiary. On January 1, 2012, the parent company issued to an unaffiliated company $1,000,000 (face value) 10 year, 10 percent bond payable for a $61,000 premium. The bonds pay interest in December 31 of each year. On January 1, 2015, the subsidiary acquired 40 percent of the bonds for $386,000. Both companies use straight-line amortization. In...
Assume that a parent company owns 80 percent of its subsidiary. The parent company uses the...
Assume that a parent company owns 80 percent of its subsidiary. The parent company uses the equity method to account for its investment in subsidiary. On January 1, 2012, the parent company issued to an unaffiliated company $1,000,000 (face value) 10 year, 10 percent bond payable for a $61,000 premium. The bonds pay interest in December 31 of each year. On January 1, 2015, the subsidiary acquired 40 percent of the bonds for $386,000. Both companies use straight-line amortization. In...
Assume that a parent company owns 80 percent of its subsidiary. The parent company uses the...
Assume that a parent company owns 80 percent of its subsidiary. The parent company uses the equity method to account for its investment in subsidiary. On January 1, 2012, the parent company issued to an unaffiliated company $1,000,000 (face value) 10 year, 10 percent bond payable for a $61,000 premium. The bonds pay interest in December 31 of each year. On January 1, 2015, the subsidiary acquired 40 percent of the bonds for $386,000. Both companies use straight-line amortization. In...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT