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Unformatted text preview: E3-1E3-2E3-3E3-41.dc (2)ad(1) The subsidiary, if it prepares its own financial statements, is not preparing2.cdb (3)a (5)them under an assumption of being part of the same economic entity as the3.bab (4)b (6)parent. The parent owes the sub the money, so the sub shows the receivable.4.a (1)bcd(2) Lots of quasi-equity securities (answer b) are not unusual in these entities.5.bba(3) Net assets of the sub are $120,000 (assets minus liabilities, aka equity).Minority owners own 25% of the company. $120,000 x 25% = $30,000.(4) The sub's stock will be picked up in the minority interest.(5) a, generally. Assumes, notably, that the subsidiary has positive netearnings.(6) The companies were not the same economic entity for the first nine monthsof the year.E3-6Potter(postElimi-Consol-merge)StatelynateidatedTotal assets645,000 350,000 (150,000)845,000 Liabilities455,000 215,000 (15,000)655,000 Equity190,000 135,000 (135,000)190,000 L + SE645,000 350,000 845,000 a.645,000 b.845,000 c.655,000 d.190,000...
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This note was uploaded on 04/12/2011 for the course ACC 5120 taught by Professor Weimer during the Fall '10 term at Wayne State University.
- Fall '10