When Performing a Consolidation,if the Balance Sheet Does Not Balance

question 2

Multiple Choice

When performing a consolidation,if the balance sheet does not balance,

• A)that indicates that the Investment in Subsidiary account on the parent's books should not be adjusted to -0-,because there is excess value represented in the investment.
• B)it is frequently because of the noncontrolling interest,as these amounts do not appear on the separate companies' general ledgers.
• C)the debit and credit totals of the adjusting/eliminating columns of the consolidation working paper should be checked to confirm that they balance,and if so,then there is no need to check the individual line items.
• D)the amount that it is "off" will always equal the noncontrolling interest in the current year net income of the subsidiary.

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Definitions:

Secondary Markets

Markets where investors buy and sell securities or assets from other investors, rather than from issuing companies directly.

Original Issue

The first issuance of a security or financial instrument to the public or to investors.

Securities

Securities that signify holding an equity stake in a company listed on the stock market, a debt interest in a corporation or government entity through bonds, or entitlement to ownership through options.

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account, following the initial purchase, to continue holding an investment.