question archive Answer the following multiple-choice question Almond acquires 80% of the share capital of Cashew on 1 August 20X6 and is preparing its group financial Not yet statements for the year ended 31 December 20X6
Answer the following multiple-choice question Almond acquires 80% of the share capital of Cashew on 1 August 20X6 and is preparing its group financial Not yet statements for the year ended 31 December 20X6
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Answer the following multiple-choice question
Almond acquires 80% of the share capital of Cashew on 1 August 20X6 and is preparing its group financial Not yet statements for the year ended 31 December 20X6.
How will Cashew's results be included in the consolidated statement of financial position at 31 Marked out of December 20X6?
O a. 100% of Cashew's assets and liabilities at 31 December 20X6 question
O b. 80% of Cashew's assets and liabilities, time apportioned for the 4 months from 1 August 20X6 to 31 December 20X6
O c. 80% of Cashew's assets and liabilities at 31 December 20X6
O d. 100% of Cashew's assets and liabilities, time apportioned for the 4 months from 1 August 20X6 to 31 December 20X6
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Answer: D
Please see the explanation field for answer and more detailed explanation
Step-by-step explanation
Answer: D
Explanation:
This is called as the consolidation period. Consolidation starts when the investor gains control of the investee and ends when the investor loses control of the investee.
In this case, if an investor takes control of an investee on August 1 20x6, the group's consolidated financial statements for the fiscal year ending December 31, 20x6 should only contain the investee's results of operations from August 1 to December 31 20x6.
Furthermore, regardless of the parent's shareholding even if the parent holds 80% only, the subsidiary's assets and liabilities are included in the consolidated financial statements at 100% of their respective values.
