The Net Incomes for Parent and Sub Inc for the Year

question 54

Multiple Choice

The Net Incomes for Parent and Sub Inc for the year ended July 31, 2012 were $120,000 and $60,000 respectively. Assuming that Parent Inc acquires 80% of Sub Inc on August 1, 2012, what amount would appear in the Non- Controlling Interest Account on the Consolidated Balance Sheet on the date of acquisition if the Proprietary Method were used?

• A) Nil
• B) $100,000
• C) $120,000
• D) $200,000

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Definitions:

Contractual Liability

The liability that individuals or entities have to one another as a result of entering into an agreement.

Common Law

A system of law based on precedent and customs rather than statutory laws.

Gap-Filling Rules

Provisions in law that allow courts or parties to fill in missing terms in a contract.

Sale Of Goods

The transfer of ownership to tangible personal property in exchange for money, other goods, or the performance of service.