Scenario 3-3
Balance sheet information for Pawnee Company and its 90%-owned subsidiary, Sioux Corporation, at December 31, 20X1, is summarized as follows:
Pawnee acquired its interest in Sioux for cash at book value several years ago when Sioux's assets and liabilities were equal to their fair values.
-Refer to Scenario 3-3. The consolidated balance sheet of Pawnee and Sioux at December 31, 20X1 will show
A) Investment in Sioux, $558,000.
B) Capital stock, $800,000.
C) Retained earnings, $1,078,000.
D) Noncontrolling interest, $65,000.

Question

Scenario 3-3
Balance sheet information for Pawnee Company and its 90%-owned subsidiary, Sioux Corporation, at December 31, 20X1, is summarized as follows:
  Pawnee acquired its interest in Sioux for cash at book value several years ago when Sioux's assets and liabilities were equal to their fair values.
-Refer to Scenario 3-3. The consolidated balance sheet of Pawnee and Sioux at December 31, 20X1 will show
A) Investment in Sioux, $558,000. 
B) Capital stock, $800,000. 
C) Retained earnings, $1,078,000. 
D) Noncontrolling interest, $65,000.

Quizplus · Accepted Answer

In a consolidated balance sheet, the parent company's capital stock is reported, which in this case is $800,000. The investment in the subsidiary and noncontrolling interest are not reported as separate line items in the consolidated balance sheet. Retained earnings would be consolidated, but the exact amount would depend on the specific financial details provided in the scenario.

Scenario 3-3 Balance Sheet Information for Pawnee Company and Its 90%-Owned Subsidiary