Question

Montgomery Company purchases 85% of Better Gravy Boat Corporation on December 31, 20X6, for $10 million...

Montgomery Company purchases 85% of Better Gravy Boat Corporation on December 31, 20X6, for $10 million and is preparing consolidated financial statements as of that date. Under the acquisition method of accounting, which of the following statements is correct with respect to Montgomery's consolidated financial statements? A. The noncontrolling interest in Better Gravy Boat's net assets is normally presented between the liabilities section and stockholders' equity section of Montgomery's balance sheet under all circumstances. B. The noncontrolling interest in Better Gravy Boat's net assets is normally initially valued at the fair value of Better Gravy's stockholders' equity under the entity theory. C. Any acquisition costs related to the noncontrolling interest portion of net assets are capitalized. D. Montgomery Company's consolidated balance sheet will reflect 85% of the fair value of the net assets acquired from Better Gravy Boat Corporation.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Montgomery Company purchases 85% of Better Gravy Boat Corporation on December 31, 20X6. Then, Montgomery Company now has the controlling interest over Better Gravy Boat Corporation. According to the accounting framework , non-controlling interest is a separate line item in the consolidated balance sheet after stockholder's equity and before the liability section.

A. The non-controlling interest in Better Gravy Boat's net assets is normally presented between the liabilities section and stockholders' equity section of Montgomery's balance sheet under all circumstances.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Montgomery Company purchases 85% of Better Gravy Boat Corporation on December 31, 20X6, for $10 million...
Montgomery Company purchases 85% of Better Gravy Boat Corporation on December 31, 20X6, for $10 million and is preparing consolidated financial statements as of that date. Under the acquisition method of accounting, which of the following statements is correct with respect to Montgomery's consolidated financial statements? A. The noncontrolling interest in Better Gravy Boat's net assets is normally presented between the liabilities section and stockholders' equity section of Montgomery's balance sheet under all circumstances. B. The noncontrolling interest in Better...
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,866,080 in cash consideration....
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,866,080 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $466,520. Seidel’s acquisition-date total book value was $1,853,000. The fair value of Seidel’s recorded assets and liabilities equaled their carrying amounts. However, Seidel had two unrecorded assets—a trademark with an indefinite life and estimated fair value of $267,050 and several customer relationships estimated to be worth $196,200 with four-year remaining...
On December 31, 20X9, Add-On Company acquired 100 percent of Venus Corporation's common stock for $300,000....
On December 31, 20X9, Add-On Company acquired 100 percent of Venus Corporation's common stock for $300,000. Balance sheet information Venus just prior to the acquisition is given here: Cash and Receivables $35,000 Inventory 75,000 Land 100,000 Buildings and Equipment (net) 220,000 Total Assets $430,000 Accounts Payable $65,000 Bonds Payable 150,000 Common Stock 100,000 Retained Earnings 115,000 Total Liabilities and Stockholders’ Equity $430,000 At the date of the business combination, Venus's net assets and liabilities approximated fair value except for inventory,...
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,797,600 in cash consideration....
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,797,600 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $449,400. Seidel’s acquisition-date total book value was $1,785,000. The fair value of Seidel’s recorded assets and liabilities equaled their carrying amounts. However, Seidel had two unrecorded assets—a trademark with an indefinite life and estimated fair value of $257,250 and several customer relationships estimated to be worth $189,000 with four-year remaining...
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,746,240 in cash consideration....
On January 1, 2021, Ackerman Company acquires 80% of Seidel Company for $1,746,240 in cash consideration. The remaining 20 percent noncontrolling interest shares had an acquisition-date estimated fair value of $436,560. Seidel’s acquisition-date total book value was $1,734,000. The fair value of Seidel’s recorded assets and liabilities equaled their carrying amounts. However, Seidel had two unrecorded assets—a trademark with an indefinite life and estimated fair value of $249,900 and several customer relationships estimated to be worth $183,600 with four-year remaining...
Part A: Multiple Choice Questions In a business combination resulting in a parent company-subsidiary relationship, the...
Part A: Multiple Choice Questions In a business combination resulting in a parent company-subsidiary relationship, the parent company's Investment in Subsidiary Common Stock ledger account balance is: Allocated to individual asset and liability ledger accounts in a parent company journal entry Displayed among noncurrent assets in the consolidated balance sheet Used as a basis for adjusting the subsidiary's asset and liability account balances in the subsidiary's ledger to current fair values Eliminated with a working paper elimination for the working...
Pickup Company acquired 100 percent of the voting common shares of Sedan Corporation by issuing bonds...
Pickup Company acquired 100 percent of the voting common shares of Sedan Corporation by issuing bonds with a par value and fair value of $200,000. Immediately prior to the acquisition, Pickup reported total assets of $600,000, liabilities of $370,000, and stockholders’ equity of $230,000. At that date, Sedan reported total assets of $500,000, liabilities of $300,000, and stockholders’ equity of $200,000. Included in Sedan’s liabilities was an account payable to Pickup in the amount of $50,000, which Pickup included in...
On December 31, 2020, Petra Company invests $41,000 in Valery, a variable interest entity. In contractual...
On December 31, 2020, Petra Company invests $41,000 in Valery, a variable interest entity. In contractual agreements completed on that date, Petra established itself as the primary beneficiary of Valery. Previously, Petra had no equity interest in Valery. Immediately after Petra’s investment, Valery presents the following balance sheet: Cash $ 41,000 Long-term debt $ 99,000 Marketing software 161,000 Noncontrolling interest 123,000 Computer equipment 61,000 Petra equity interest 41,000 Total assets $ 263,000 Total liabilities and equity $ 263,000 Each of...
On December 31, 2017, PanTech Company invests $22,000 in SoftPlus, a variable interest entity. In contractual...
On December 31, 2017, PanTech Company invests $22,000 in SoftPlus, a variable interest entity. In contractual agreements completed on that date, PanTech established itself as the primary beneficiary of SoftPlus. Previously, PanTech had no equity interest in SoftPlus. Immediately after PanTech’s investment, SoftPlus presents the following balance sheet: Cash $ 22,000 Long-term debt $ 132,000 Marketing software 154,000 Noncontrolling interest 66,000 Computer equipment 44,000 PanTech equity interest 22,000 Total assets $ 220,000 Total liabilities and equity $ 220,000 Each of...
On December 31, 2017, PanTech Company invests $30,000 in SoftPlus, a variable interest entity. In contractual...
On December 31, 2017, PanTech Company invests $30,000 in SoftPlus, a variable interest entity. In contractual agreements completed on that date, PanTech established itself as the primary beneficiary of SoftPlus. Previously, PanTech had no equity interest in SoftPlus. Immediately after PanTech’s investment, SoftPlus presents the following balance sheet: Cash $ 30,000 Long-term debt $ 180,000 Marketing software 210,000 Noncontrolling interest 90,000 Computer equipment 60,000 PanTech equity interest 30,000 Total assets $ 300,000 Total liabilities and equity $ 300,000 Each of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT