5. B (115,000 x 20%) = 23,000 6.B – equal to parent’s retained earnings 7.

A Solution: Other assets (138,000 + 115,000) 253,00

assets (138,000 + 115,000) 253,000 Goodwill 40,000 Total assets 293,000 Common stock (Parent only) 50,000 Additional paid-in capital (P
50,000 Additional paid-in capital (Parent only) 80,250 Retained earnings (Parent only) 139,750 Equity attributable to owners of the parent
ributable to owners of the parent 270,000 Non-controlling interest 23,000 Total equity 293,000 8.A (See previous solution) PROBLEM 2: M
e previous solution) PROBLEM 2: MULTIPLE CHOICE 1.B Penn controls Sell; Sell controls Vane; Therefore, Penn controls Vane too. 2.D - Sin
, Penn controls Vane too. 2.D - Since S1 already holds controlling interest in S2 when P acquired S1, the acquisition date for both S1 and S
acquisition date for both S1 and S2 is on J anuary 1, 20x 3. 3.D 4.E - Since S1 acquires S2 only after P acquired S1, the acquisition dates are
uired S1, the acquisition dates are: (a) January 1, 20x1 for S 1 and (b) J anuary 1, 20x 3 for S 2. 5.E 6.C 7. C (48,000 + 64,000) = 112,000 ‘Se
C (48,000 + 64,000) = 112,000 ‘See Step 3 below’ Solutions: