Small Corp

question 6

Multiple Choice

Small Corp.and Big Corp.are equal partners in Medium Enterprises.The partnership has a net worth of $210,000,split 50/50 between the two corporations.Size Corp.has been asked to join the partnership.When the transaction is complete,all three partners will have an equal interest.To accomplish this structural change,Size Corp.will contribute $105,000 to the partnership treasury.This transaction will

• A)dilute the original partners' interests.
• B)increase the original partners' interests.
• C)result in a capital gain for the partners.
• D)result in a capital loss for the partners.

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Definitions:

Non-controlling Interest

A minority stake in a company, represented by shares that do not grant the shareholder the majority of voting power.

Acquired Goodwill

The excess value paid for a company over the fair value of its identifiable net assets during an acquisition.

Non-controlling Interest

An equity interest in a subsidiary not held by the parent company, reflecting the share of the subsidiary's equity owned by external investors.

AASB 10

An accounting standard issued by the Australian Accounting Standards Board that outlines the requirements for the preparation and presentation of consolidated financial statements.