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.

Question

Quizplus · Accepted Answer

When a company acquires a controlling interest in another company, the consolidated balance sheet reflects the parent company's shareholder equity, not the sum of both companies' equity or the proportional share of the subsidiary's net assets.

Company Y Purchases a Controlling Interest in Company Z on January