[marti85]

Wiley Question –

Hello everyone,
I finished my becker review homework and now I’m doing MCQ’s from CPAexcel.
I learned from Becker that in consolidated statements all assets and liabilities of both the parent and the subsidiary are added together (adjustments are made at year end for FV). But for the Equity portion, its only the parent’s equity, or parents equity plus Noncontrolling interest.

Why is CPA excel lumping both parent’s equity and all subs equity together? Am I missing some basic concept?

Here an example of a question, shouldn’t the consolidated equity be the net assets of the 100% sub plus the Noncontrolling interest of the 10% Sub? ::

Mr. and Mrs. Gasson own 100% of the common stock of Able Corp. and 90% of the common stock of Baker Corp. Able previously paid $4,000 for the remaining 10% interest in Baker. The condensed December 31, year 2 balance sheets of Able and Baker are as follows:

Able Baker
Assets $600,000 $60,000
Liabilities $200,000 $30,000
Common stock 100,000 20,000
Retained earnings 300,000 10,000
$600,000 $60,000
In a combined balance sheet of the two corporations at December 31, year 2, what amount should be reported as total stockholders’ equity?

Correct answer is $426,000