Company Y Purchases a Controlling Interest in Company Z on January

question 66

Multiple Choice

Company Y purchases a controlling interest in Company Z on January 1,2002.Which of the following would appear as the Shareholder Equity amount on Company Y's Consolidated Balance Sheet on the date of acquisition?

• A)Company Y's Shareholder Equity
• B)The sum of the Shareholder Equity of both companies.
• C)Company Y's Shareholder Equity as well as Company Y's proportional share of company Z's net assets at book value.
• D)Company Y's Shareholder Equity as well as Company Y's proportional share of company Z's net assets at Fair Market Value.

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Definitions:

Cash Dividend

A disbursement by a corporation from its profits to its stockholders, typically as cash.

Increases

The act or process of becoming larger or greater in size, number, value, or amount.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, usually paying fixed dividends.

Common Stock

Equity security representing ownership interest in a corporation, with holders entitled to vote at company meetings and receive dividends.