The Following Data Pertains to Questions

question 34

Multiple Choice

The following data pertains to questions
Parent and Sub Inc had the following balance sheets on July 31,2007: The Net Incomes for Parent and Sub Inc for the year ended July 31,2007 were $120,000 and $60,000 respectively.
-Assuming that Parent Inc acquires 80% of Sub Inc,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)$200,000
• B)Nil
• C)$120,000
• D)$100,000

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Definitions:

Depreciation Expense

Systematically dividing the expense of a tangible asset over the period it remains useful.

Scrap Value

The estimated worth of an asset's materials when the asset is deemed no longer useful and is intended to be disposed of or recycled.

Straight-line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its expected useful life.

Salvage Value

Salvage value refers to the predicted value an asset will have when it is sold after reaching the end of its usability.