Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Chapter 1, Problem 5DYS
1.
To determine
Explain the protective non-controlling rights.
2.
To determine
Explain the substantive participating non-controlling rights.
3.
To determine
Explain the non-controlling rights which overcome the presumption that all majority-owned investees should be consolidated.
4.
To determine
Explain issues in determining whether Zee should consolidate Bee or report its investment in Bee under the equity method.
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RESEARCH CASE—NONCONTROLLING SHAREHOLDER RIGHTS
Consolidated financial reporting is appropriate when one entity has a controlling financial interest in another entity. The usual condition for a controlling financial interest is ownership of a majority voting interest. But in some circumstances, control does not rest with the majority owner—especially when noncontrolling owners are contractually provided with approval or veto rights that can restrict the actions of the majority owner. In these cases, the majority owner employs the equity method rather than consolidation.
Required
Address the following by searching the FASB ASC Topic 810 on consolidation.
What are protective noncontrolling rights?
What are substantive participating noncontrolling rights?
What noncontrolling rights overcome the presumption that all majority-owned investees should be consolidated?
Zee Company buys 60 percent of the voting stock of Bee Company with the remaining 40 percent noncontrolling interest held by…
Some advantages of obtaining control by acquiring a controlling interest in stock include all
but:
O The cost may be lower since only a controlling interest in the assets, not the total assets, is acquired.
O The legal liability of each corporation is limited to its own assets.
O Negotiations are made directly with the acquiree's management.
O Tax advantages may result from preservation of the legal entities.
Answer with true or false. No need explanation.
1. Indirect cost incurred by the entity in business combination is recognized as expense.
2. PFRS 10 defines control as the power to govern the financial and operating policies as to obtain benefits from its activities.
3. An investor has no power over the investee even if the investor holds the majority of the voting rights if those rights are not substantive.
4. A subsidiary should be excluded from the consolidated statements if the subsidiary operates under governmentally impose uncertainty.
Chapter 1 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
Ch. 1 - A company acquires a rather large investment in...Ch. 1 - What accounting treatments are appropriate for...Ch. 1 - Prob. 3QCh. 1 - Why does the equity method record dividends from...Ch. 1 - Prob. 5QCh. 1 - Smith. Inc., has maintained an ownership interest...Ch. 1 - Prob. 7QCh. 1 - Because of the acquisition of additional investee...Ch. 1 - Prob. 9QCh. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - In a stock acquisition accounted for by the equity...Ch. 1 - Prob. 13QCh. 1 - What is the difference between downstream and...Ch. 1 - Prob. 15QCh. 1 - Prob. 16QCh. 1 - What is the fair-value option for reporting equity...Ch. 1 - When an investor uses the equity method to account...Ch. 1 - Which of the following does not indicate an...Ch. 1 - Prob. 3PCh. 1 - Under fair-value accounting for an equity...Ch. 1 - When an equity method investment account is...Ch. 1 - Prob. 6PCh. 1 - In January 2017, Domingo, Inc., acquired 20...Ch. 1 - Prob. 8PCh. 1 - Evan Company reports net income of 140,000 each...Ch. 1 - Perez, Inc., applies the equity method for its 25...Ch. 1 - Prob. 11PCh. 1 - Alex, Inc., buys 40 percent of Steinbart Company...Ch. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Prob. 15PCh. 1 - On January 1, 2017, Alison, Inc., paid 60,000 for...Ch. 1 - Prob. 17PCh. 1 - Prob. 18PCh. 1 - Prob. 19PCh. 1 - Prob. 20PCh. 1 - Prob. 21PCh. 1 - Echo, Inc., purchased 10 percent of ProForm...Ch. 1 - Prob. 23PCh. 1 - Prob. 24PCh. 1 - Prob. 25PCh. 1 - Prob. 26PCh. 1 - Belden, Inc. acquires 30 percent of the...Ch. 1 - Prob. 28PCh. 1 - Prob. 29PCh. 1 - On July 1, 2016, Killearn Company acquired 88,000...Ch. 1 - Prob. 31PCh. 1 - On January 1, 2017, Stream Company acquired 30...Ch. 1 - EXCEL CASE 1 On January 1, 2018, Acme Co. is...Ch. 1 - Access The Coca-Cola Companys SEC 10-K filing at...Ch. 1 - Prob. 4DYSCh. 1 - Prob. 5DYS
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