Bland Corporation purchases 75 percent of the stock of Carroll Corporation for $726,000.Sikora has contributed capital of $400,000 and retained earnings of $568,000.The consolidated financial statements will contain

Question

Quizplus · Accepted Answer

Since Bland Corporation has acquired 75% of the stock of Carroll Corporation, it now has control over the company. Therefore, the consolidated financial statements will include the financial information of both companies combined. However, since Bland Corporation does not own 100% of Carroll Corporation, a portion of the net income will belong to the minority interest. Therefore, a minority interest must be included in the consolidated financial statements. Additionally, since Bland Corporation paid more than the fair value of the net assets of Carroll Corporation, goodwill must also be included in the consolidated financial statements. However, there is no negative goodwill in this scenario.

Bland Corporation Purchases 75 Percent of the Stock of Carroll