Asked by
Katie Berry
on Dec 01, 2024
Verified
Under the parent-company extension method, the balance of the non-controlling interest at December 31, 20X7, was $600,000. What adjustment should be made to the consolidated shareholders' equity to reflect Frey's additional purchase of shares?
A) $50,000
B) $66,667
C) $200,000
D) $250,000
Parent-Company Extension Method
A method in accounting where the parent company extends its financial statements to include the financial activities of its subsidiaries as if they are part of the parent company itself.
Consolidated Shareholders' Equity
The total amount of equity attributed to shareholders of the parent company and its subsidiaries, after eliminating intra-group transactions and balances.
Non-controlling Interest
Non-controlling interest is a portion of the equity in a subsidiary not owned directly or indirectly by the parent company, representing minority shareholders' interest in the subsidiary's net assets.
- Acquire knowledge about the influence of purchasing shares on the aggregated equity of shareholders in consolidated accounts through differing accounting techniques.
- Acquire knowledge on the treatment of non-controlling interests in the process of consolidating financial statements.
- Differentiate between the entity approach and the parent-company extension approach in the context of consolidation.
Verified Answer
JL
Learning Objectives
- Acquire knowledge about the influence of purchasing shares on the aggregated equity of shareholders in consolidated accounts through differing accounting techniques.
- Acquire knowledge on the treatment of non-controlling interests in the process of consolidating financial statements.
- Differentiate between the entity approach and the parent-company extension approach in the context of consolidation.