When preparing a set of consolidated financial statements, the pre-acquisition entry relates to:
A) both the parent and the non-controlling interest in the subsidiary.
B) only the investment by the non-controlling interest in the subsidiary.
C) only the investment by the parent in the subsidiary.
D) the total investment by the parent in the subsidiary plus the after-tax effect of the investment by the non-controlling interest.

Question

Quizplus · Accepted Answer

The pre-acquisition entry relates only to the investment made by the parent in the subsidiary, as it reflects the financial impact of acquiring the subsidiary and recording it as an investment. The non-controlling interest's investment is recorded separately as a portion of equity in the consolidated financial statements.

When Preparing a Set of Consolidated Financial Statements, the Pre-Acquisition