Asked by Tmobile Oakland on Jun 06, 2024
Verified
Beta Corp. owns less than one hundred percent of the voting common stock of Shedds Co. Under what conditions will Beta be required to prepare consolidated financial statements?
Consolidated Financial Statements
Financial statements that aggregate the financial position and results of operations of a parent company and its subsidiaries.
Voting Common Stock
Shares that give the shareholder the right to vote on corporate matters such as the election of the board of directors.
Less Than 100%
A phrase often used to indicate a partial interest or ownership in an entity, asset, or venture that does not constitute a total or whole interest.
- Prepare a fair-value allocation and amortization schedule, including goodwill.
Verified Answer
MA
Maqsood AhmadJun 10, 2024
Final Answer :
Beta will be required to prepare consolidated financial statements if it has control of Shedds. If Beta has more than 50% of the voting common stock of Shedds, it has control and must prepare consolidated financial statements. Occasionally, ownership of less than 50% of the voting common stock can confer control. In this situation, an argument can be made that the company with control should prepare consolidated financial statements, although such reporting is not currently required.
Learning Objectives
- Prepare a fair-value allocation and amortization schedule, including goodwill.