Parma Corp. and Seville Corp. Condensed balance sheets on Jan 1 are presented below. On Jan 2, Parma borrowed $60,000 and used the proceeds to purchase 90% of the outstanding common shares of Seville. Parma had no prior equity interest in Seville. Ten equal principal and interest payments begin Dec 30. The excess of the consideration transferred over Seville’s carrying amount of its identifiable net assets should be assigned 60% to inventory and 40 % to Goodwill. Moreover, the per-share fair value of the controlling and non- controlling interest is the same at the acquisition date.

On Parma’s Jan 2 consolidated B/S, equity should be

A.      $80,000

B.      $86,000

C.      $90,000

D.      $130,000

The correct answer is A…can someone help me out?

I know that Parma’s 90 % interest in the Carrying amount of the identifiable net assets of Seville is $45,000. Parma paid $60,000. So $15,000 difference goes to inventory of $9000 and goodwill of $ 6000. And I am lost from here? Thanks for reading .

This question is very simple, don't make it too complex

the question being asked is, what should be the equity on consolidated B/S on Jan 2, and the answer is $80,000, the equity of parent company.

well...how about the 10% non-controlling interest...it should be a line item -NON controlling interest - on Parent's shareholders equity...right? THanks

I think you have overstudied....... lol

non-controlling interest is for subsidiary, not parent

but i remember i read sth related to it  in becker-

please take a look at the following question if u have time...thx

This question is from Becker passmaster-

	Dallas	Style
	12/31/91	12/31/91	01/01/91
Investment in style ( equity method)	132,000
Other assets	138,000	115,000	100,000
Total assets	270,000	115,000	100,000
C/S	50,000	20,000	20,000
APIC	80,250	44,000	44,000
R/E	139,750	51,000	36,000
	270,000	115,000	100,000

What amount of total shareholders' equity should be reported What amount of total shareholders' equity should be reported in Dallas' December 31, 1991, consolidated balance sheet?

a. $270,000

b. $286,000

c. $303,000

d. $385,000

The correct answer is C…not A. And in becker , it continues to say:

This question asks for consolidated equity on the December 31 balance sheet. Under acquisition method accounting, consolidated equity should include any noncontrolling interest.

Well...i wish i really overstudied...lol