Parent Company acquired 10% interest in Sub Company.
|Parent Company Balance Sheet||Sub Company Balance Sheet|
|Assets, Liabilities, & Equities||Book Value||Assets, Liabilities, & Equities||Book Value||Fair Value|
|Plant and Equipment||600,000||Plant and Equipment||400,000||300,000|
|Less: Accumulated Depreciation||(150,000)||Less: Accumulated Depreciation||(150,000)|
|Additional Paid-in Capital||560,000||Common Stock||100,000|
|Retained Earnings||300,000||Additional Paid-in Capital||60,000|
|Total Liabilities & Equity||$980,000||Retained Earnings||270,000|
|Total Liabilities & Equity||$480,000|
1. Which of the following describes the ownership interest of Parent Company over Sub Company?
b) Significant Influence
c) Insignificant Interest
d) None of the above
Investment is an asset account presented in the balance sheet. Accounting for investment will vary depending on the ownership interest acquired by a company. They can use cost model, equity model or acquisition model.
Answer and Explanation:
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from Corporate Finance: Help & ReviewChapter 2 / Lesson 6