Arrange the following steps of preparation of consolidated balance sheet correctly. 1. Calculation of pre-acquisition profits 2. Calculation of minority interest 3. Calculation of post-acquisition profits 4. Calculation of cost of capital A. 4, 3, 2, 1 B. 2, 4, 1, 3 C. 3, 1, 4, 2 D. 3, 4, 1, 2

The correct answer is: D. 3, 4, 1, 2

The steps of preparation of consolidated balance sheet are as follows:

1. Identify the parent company and its subsidiaries.
2. Determine the percentage of ownership of each subsidiary by the parent company.
3. Calculate the minority interest.
4. Calculate the pre-acquisition profits and post-acquisition profits.
5. Prepare the consolidated balance sheet.

The minority interest is the portion of the equity of a subsidiary that is not owned by the parent company. It is calculated by multiplying the subsidiary’s equity by the parent company’s percentage of ownership.

The pre-acquisition profits are the profits of the subsidiary that were earned before the parent company acquired it. The post-acquisition profits are the profits of the subsidiary that were earned after the parent company acquired it.

The consolidated balance sheet is a financial statement that shows the combined financial position of the parent company and its subsidiaries. It is prepared by adding together the assets, liabilities, and equity of the parent company and its subsidiaries, and then eliminating the intercompany balances and transactions.

Here is an example of how to prepare a consolidated balance sheet:

Parent Company

Assets: $100
Liabilities: $50
Equity: $50

Subsidiary

Assets: $50
Liabilities: $25
Equity: $25

Parent Company’s Ownership of Subsidiary: 100%

Minority Interest: 0%

Pre-acquisition Profits: $10
Post-acquisition Profits: $20

Consolidated Balance Sheet

Assets: $150
Liabilities: $75
Equity: $75

The minority interest is calculated by multiplying the subsidiary’s equity by the parent company’s percentage of ownership. In this case, the minority interest is $0 because the parent company owns 100% of the subsidiary.

The pre-acquisition profits are the profits of the subsidiary that were earned before the parent company acquired it. In this case, the pre-acquisition profits are $10.

The post-acquisition profits are the profits of the subsidiary that were earned after the parent company acquired it. In this case, the post-acquisition profits are $20.

The consolidated balance sheet is prepared by adding together the assets, liabilities, and equity of the parent company and its subsidiaries, and then eliminating the intercompany balances and transactions. In this case, the consolidated balance sheet shows that the parent company and its subsidiary have total assets of $150, total liabilities of $75, and total equity of $75.