A Co Has Acquired an 80% Controlling Interest in B Co

question 32

Multiple Choice

A Co. has acquired an 80% controlling interest in B Co. If using the proportionate consolidation method, the consolidated balance sheet on the date of acquisition, will contain:

• A) the parent's pro rata share of the assets and liabilities of the subsidiary at book value.
• B) 100% of the assets and liabilities of the subsidiary at fair market value.
• C) 100% of the assets and liabilities of the subsidiary at book value.
• D) the parent's pro rata share of the assets and liabilities of the subsidiary at fair market value.

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Definitions:

Partnership Interest

An ownership share in a partnership, representing a partner's stake in the business's assets and earnings.

Limited Partnership

A form of partnership comprising at least one general partner, who manages the business and is personally liable for partnership debts, and one or more limited partners, who contribute capital and share in profits but are not involved in management and are only liable to the extent of their investment.

Limited Personal Liability

Limited personal liability means that an individual's financial responsibility for business debts or legal claims is restricted, often to the amount they have invested in a company.

Partners

Individuals who share ownership in a business, contributing resources or expertise and sharing profits and losses.