The following consolidation adjusting journal entries appeared at the end of a period in which the parent sold all of its shareholding in a subsidiary.It received $1,200,000 for the shares. The amount of the share of post-acquisition profits and movements in equity balances,contributed to the group by the subsidiary,and attributable to the parent,is:
A) ($250,000).
B) $350,000.
C) $750,000.
D) $1,200,000.
E) Cannot be determined from the information given.

Question

The following consolidation adjusting journal entries appeared at the end of a period in which the parent sold all of its shareholding in a subsidiary.It received $1,200,000 for the shares.  The amount of the share of post-acquisition profits and movements in equity balances,contributed to the group by the subsidiary,and attributable to the parent,is:
A) ($250,000). 
B) $350,000. 
C) $750,000. 
D) $1,200,000. 
E) Cannot be determined from the information given.

Quizplus · Accepted Answer

The sale of the subsidiary means that its net assets, including any post-acquisition profits and movements in equity balances, are no longer included in the consolidated financial statements. Therefore, the amount of the share of post-acquisition profits and movements in equity balances contributed to the group by the subsidiary and attributable to the parent would be the total amount of such balances in the subsidiary's equity accounts, which is $750,000.

The Following Consolidation Adjusting Journal Entries Appeared at the End