Why is it important to know if the parent paid a premium to acquire control of a subsidiary?
What will be an ideal response?
It is necessary to ascertain the subsidiary's total fair value at the acquisition date so that the value can be appropriately attributed to the parent and to the noncontrolling interest. If there is a control premium, then the total fair value of the subsidiary can not be implied by the parent's consideration transferred unless the premium amount is first removed from the consideration value. If separate share fair values are specifically known for the shares acquired by the parent and the shares held by the noncontrolling interest, then the total fair value can be directly calculated. In either calculation, the control premium affects primarily the parents' shares acquired, and thus goodwill is disproportionately (relative to the ownership percentages) allocated to the controlling and noncontrolling interests. This disproportionate allocation of goodwill is essential to know because the resulting allocation of goodwill affects Entry A for the worksheet and thus affects the resulting balance of the noncontrolling interest reported on the consolidated balance sheet.
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Wei is a manager of several subordinates who seem to be low in self-efficacy. In an effort to improve this, she should
A. let them learn new tasks independently. B. give them simplistic jobs. C. immediately create very challenging goals for them. D. provide guided experiences and mentoring. E. avoid giving positive feedback.
All of the following statements regarding the gross profit ratio are true except:
a. Managers, investors, and creditors use the gross profit ratio to measure one aspect of profitability. b. The gross profit ratio alone is sufficient to determine a company's profitability. c. If a company's net sales were $200,000 and cost of goods sold were $120,000, its gross profit ratio would be 40%. d. The gross profit ratio explains how many cents on every dollar are available to cover expenses other than cost of goods sold and to earn a profit.
Before closing, the balance in the income summary account equals the net income or the net loss of the fiscal period
Indicate whether the statement is true or false
Nathan is dependable, responsible, and achievement-oriented, while Martin is relaxed and unworried. Nathan is likely to score high on
A. conscientiousness. B. openness to experience. C. internal locus of control. D. introversion. E. agreeableness.