Select True (T) or False (F) for Each of the Following

question 35

Essay

Select True (T) or False (F) for each of the following statements:
_____ 1.A parent will recognize a gain or loss if it sells a portion of its investment in a subsidiary and maintains control after the sale.
_____ 2.A parent sells a portion of its investment in a subsidiary and no longer maintains control.This sale of shares represents a remeasurement event for the investee.
_____ 3.International financial reporting standards (IFRS) allow an option to value the noncontrolling interest with goodwill or to value the noncontrolling interest without goodwill.
_____ 4.Consolidated net income represents the combined net income of the parent and subsidiary after subtracting the noncontrolling interest in the net income of the subsidiary.
_____ 5.The total acquisition-date fair value of an acquired firm is the sum of the fair value of the controlling interest and the fair value of the noncontrolling interest.
_____ 6.When control of a subsidiary is acquired on a date other than the first day of a fiscal year, excess amortization expenses are pro-rated to include only the post-acquisition period.
_____ 7.For a mid-year acquisition following an equity method investment of the same company, the consolidated income statement will report consolidated revenues and expenses for the entire year.
_____ 8.In a step acquisition where the parent previously held a noncontrolling interest in the acquired firm, the parent remeasures the prior interest to fair value.
_____ 9.When a parent has control over a subsidiary with less than 100 percent ownership, and thereafter increases its ownership, the parent remeasures the prior interest to fair value.

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Definitions:

Nominal Yield

The nominal yield of a bond or other fixed-income investment is the interest rate stated on the financial instrument, which does not account for inflation or the compounding of interest.

Semiannual Interest Payments

These are interest payments made twice a year on a financial instrument, such as a bond.

Coupon Rate

The annual interest rate paid by a bond's issuer to its bondholders, usually expressed as a percentage of the face value.

Face Value

The nominal or dollar value printed on a stock, bond, or other financial instrument, representing its legal value.