parent company-subsidiary affiliation

parent company-subsidiary affiliation - through another...

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View Full Document Right Arrow Icon Chapter 5,6,7 True or False 1. In a business combination that establishes a parent company-subsidiary affiliation, the subsidiary prepares journal entries on the date of the combination to increase the carrying amounts of its net assets to current fair values. Answer: False 2.Only the balance sheet is consolidated on the date of a business combination of a parent company and subsidiary. Answer: True 3.A controlling financial interest traditionally has been defined as the investor corporation's ownership of more than 50% of the investee corporation's outstanding common stock. Answer: True 4.All out-of-pocket costs of a business combination reduce additional paid-in capital of the combinor. Answer: False 5.Consolidated financial statements emphasize the legal form of the parent company-subsidiary relationship. Answer: False 6. A parent company's control of a subsidiary may be achieved both directly and indirectly, the latter
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Unformatted text preview: through another subsidiary of the parent. Answer: True 7.A debit to Goodwill Subsidiary in a working paper elimination (in journal entry format) for a parent company and its wholly owned subsidiary indicates that the current fair values of the subsidiary's identifiable net assets exceeded their carrying amounts on the date of the business combination. Answer: False 8.Goodwill recognized in a business combination of a parent company and a partially owned subsidiary is attributable to the subsidiary. Answer: False 9.In a business combination resulting in a parent company-subsidiary affiliation, the parent company's Investment in Subsidiary Common Stock ledger account is not closed, as it is in other types of business combinations. Answer: True 10.Under the parent company concept of consolidated financial...
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