What are the effects of subsidiary stock transactions?
As this illustration shows, subsidiary stock transactions can alter the level of parent ownership. A subsidiary, for example, can decide to sell previously unissued stock to raise needed capital. Although the parent company can acquire a portion or even all of these new shares, such issues frequently are marketed entirely to outsiders.
Can a subsidiary be forced to sell additional shares of stock?
A subsidiary could also be legally forced to sell additional shares of its stock. As an example, companies holding control over foreign subsidiaries occasionally encounter this problem because of laws in the individual localities.
How would consolidated earnings per share be calculated if the subsidiary?
How would consolidated earnings per share be calculated if the subsidiary has no convertible securities or warrants? Consolidated net income divided by parent's number of shares outstanding.
What is the consolidation entry for a subsidiary stock dividend?
Therefore, a subsidiary stock dividend requires no special treatment prior to development of a worksheet. The consolidation Entry S made just after the issuance of this stock dividend follows. The $560,000 component of the investment account continues to be offset against the stockholders’ equity of the subsidiary.
How would Consolidated earnings per share be calculated if the subsidiary?
How would consolidated earnings per share be calculated if the subsidiary has no convertible securities or warrants? Consolidated net income divided by parent's number of shares outstanding.
Where does the noncontrolling interest in Stage's net income appear on a consolidated statement of cash flows?
Where does the noncontrolling interest in Stage's net income appear on a consolidated statement of cash flows? Noncontrolling interest in Stage's net income does not appear on a consolidated statement of cash flows.
Which of the following characteristics is not indicative of an enterprise qualifying?
Which of the following characteristics is not indicative of an enterprise qualifying as a primary beneficiary with a controlling financial interest in a variable interest entity? No ability to make decisions about the entity's activities.
How is the noncontrolling interest displayed in a consolidated balance sheet?
To calculate the non-controlling interest of the balance sheet, take the subsidiaries book value and multiply by the non-controlling interest percentage. For example, if the organization owns 70% of the subsidiary and a minority partner owns 30% and subsidiaries book value is $8M.
How do you present minority interest in a consolidated balance sheet?
Minority interests should be presented in the consolidated balance sheet separately from liabilities and the equity of the parent's shareholders. Minority interests in the income of the group should also be separately presented.
What is pro rata consolidation?
Pro Rata Consolidation Method means the pro rata method of consolidation as fully reconciled to GAAP and as reported on each Form 8-K that is furnished by the Parent (or on its behalf) to the Securities and Exchange Commission.
Can a wholly owned subsidiary be a VIE?
The key thing with a VIE is that if they're properly structured, the company is allowed to consolidate the operations of the VIE with the parent company as if it owned it as a wholly-owned subsidiary. That was a really important thing for these companies to be able to list abroad.
Which of the following is most likely an essential characteristic of a liability?
One of the essential characteristics of a liability is that the transaction or other event obligating the entity will probably occur in the future.
How is controlling interest divided?
As long as no such securities exist, the controlling interest's share of consolidated net income is divided by the number of outstanding parent company shares. The numerator and denominator adjustments caused by parent company di-lutive securities can be considered in the normal manner.
When is special analysis required for consolidated BEPS and DEPS?
Special analysis is required in computing consolidated BEPS and DEPS when an acquisition occurs during a reporting period. When the acquisition is a pooling of interests, the computations of both BEPS and DEPS include subsidiary income and securities for the entire period.
How is the EPS model modified?
The EPS model for a single entity is modified in two ways: 1. Only the parent's adjusted internally generated net income, the parent's income adjusters, and the parent's share adjusters enter the formula directly. 2.
When did Riley Corp buy bonds?
On January 1, 2011, Riley Corp. acquired some of the outstanding bonds of one of its subsidiaries. The bonds had a carrying value of $421,620, and Riley paid $401,937 for them.
When did Matthews buy the bonds?
On January 1, 2011, when there was an unamortized discount of $2,000 and a remaining life of 5 years, its 80% owned subsidiary, Matthews Company, purchased the bonds in the open market for $11,000. The bonds pay 6% interest annually on December 31. The companies use the straight-line method to amortize interest revenue and expense.
When a subsidiary buys or sells its own stock, does it have a nonoperational increase or decrease
When a subsidiary subsequently buys or sells its own stock, a nonoperational increase or decrease occurs in the company’s fair and book value. Because the transaction need not involve the parent, the parent’s investment account does not automatically reflect the effect of this change.
Does a stock dividend affect book value?
A stock dividend, whether large or small, capitalizes a portion of the issuing company’s retained earnings and, thus, does not alter book value. Shareholders recognize the receipt of a stock dividend only as a change in the recorded cost of each share rather than as any type of adjustment in the investment balance.
Can a subsidiary repurchase its own stock?
Of course, changes in the level of parent ownership do not result solely from stock sales: A subsidiary also can repurchase its own stock. The acquisition, as well as the possible retirement, of such treasury shares serves as a means of reducing the percentage of outside ownership.