Any inter-company gain on a downstream sale of fixed assets should be recognized in consolidated net income: I. in the year of the downstream sale. II. over the period of time the subsidiary uses the asset. III. in the year the subsidiary sells the assets to an unrelated party. Group of answer choices I. II. III. I and II

Any inter-company gain on a downstream sale of fixed assets should be recognized in consolidated net income: I. in the year of the downstream sale. II. over the period of time the subsidiary uses the asset. III. in the year the subsidiary sells the assets to an unrelated party. Group of answer choices I. II. III. I and II

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 16MCQ

See similar textbooks

Related questions

Q: Statement I: In a business combination achieved in stages, the resulting gain or loss from the…

A: Business combination: Business combination refers to the process in which one business obtains…

Q: Starting from the separate cost of goods sold of the affiliates, the consolidated cost of goods sold…

A: Consolidation refers to the process under which two or more companies combine their assets,…

Q: Which of the following statements is true regarding the acquisition method of accounting for a…

A: The assets and liabilities of the acquired company are recognised at their fair values at the…

Q: In the year a subsidiary sells land to its parent company at a gain, a workpaper entry is made…

A: The Work paper entry is the entry that is used to eliminate the impact of unearned profit which is…

Q: An intra - entity transfer of a depreciable asset took place whereby the transfer price exceeded the…

A: Consolidation is an activity in which financial statements of a parent and its subsidiary should be…

Q: When preparing the consolidated financial statements, which of the following should be deducted from…

A: Consolidated financial statements are the "financial statements of a gaggle within which the assets,…

Q: User Which of the following is true about the Determination and Distribution Schedule? a/ It…

A: a) It measures the excess of the fair value of the subsidiary over the fair value of net…

Q: What effect, if any, would the payment of dividends by a controlled entity, out of its…

A: Consolidation refers to the process of combining the financial statements of a parent company and…

Q: for the following intercompany transaction state the principle to be used in accounting for…

A: In this question we have been given the current or the future event of transaction. We have to…

Q: Under the equity method of accounting for the operating results of a subsidiary, the dividends…

Q: The parent company records its share of subsidiary’s income by A. Crediting Investment in Subsidiary…

A: The value strategy is a bookkeeping procedure utilized by an organization to record the benefits…

Q: 1: Tony Daniels (Married; 4 federal withholding allowances) earned weekly gross pay of $800. Federal…

A: Tony Daniels, Married (Earned weekly gross pay of $800) Federal Income Tax withholding =$19.20 +…

Q: How is the goodwill appearing on the statement of the financial position for a subsidiary prior to a…

A: The business combination can be a part of corporate restructuring and which is carried out to…

Q: for the following intercompany transaction state the principle to be used in accounting for…

A: Intercompany Gains means profit arising from transactions like transfer of inventory, sale of assets…

Q: Which consolidation method should be used in preparing consolidated financial statements in…

A: To achieve the objective of having common accounting language all over the world, The International…

Question

Any inter-company gain on a downstream sale of fixed assets should be recognized in consolidated net income:

I. in the year of the downstream sale.
II. over the period of time the subsidiary uses the asset.
III. in the year the subsidiary sells the assets to an unrelated party.

Group of answer choices

II.

III.

I and II

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Downstream sale

VIEW

Step 2: Gain on downstream sale

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

for the following intercompany transaction state the principle to be used in accounting for intercompany gains on current and future consolidated income statements: Gains on the sale of depreciable fixed assets
Consolidated net income for a parent company and its partially owned subsidiary is best defined as the parent company’sA. Recorded net income plus the subsidiary’s recorded net income after adjustment from any amortization of excess amount from book value compared to fair value.B. Recorded net incomeC. Income from independent operations plus subsidiary’s income resulting from transactions with outside parties after adjustment from any amortization of excess amount from book value compared to fair value.D. Recorded net income plus the subsidiary’s recorded net income
If a revaluation of the subsidiary’s assets is performed on consolidation, the subsidiary’s assets are carried into the consolidated statement of financial position at: Select one: a. Net present value. b. Historical cost. c. Fair value. d. Current replacement cost.
1. When preparing the consolidated financial statements, which of the followingshould be deducted from the group reserves?a) Share in associate profit b) Value of the loan from subsidiary to associate c) Group’s share of sub-subsidiary’s profit d) Value of goodwill impairment expense
In a business combination, an acquirer's interest in the fair value of the net assets acquired exceeds the consideration transferred in the combination. Under PFRS 3 Business Combinations, the acquirer should A. recognize the excess immediately in profit or los B. recognize the excess immediately in other comprehensive income C. reassess the recognition and measurement of the net assets acquired and the consideration transferred, then recognize any excess immediately in other comprehensive income D. reassess the recognition and measurement of the net assets acquired and the consideration transferred, then recognize any excess immediately in profit or loss
When an entity sells a non-current asset at a profit to another entity within the same group, which of the following adjustments is necessary on consolidation? Select one: a. Dr Asset, DR Gain on sale b. Dr Gain on sale, CR Asset c. Dr Gain on sale, CR Cash d. Dr Asset, CR Cash
a) The amount of the adjustment to the non-controlling interest in consolidated net assets is equal to the non-controlling interest’s percentage of the A. Realized intercompany gain at the end of the period. B. Unrealized intercompany gain at the beginning of the period C. Realized intercompany gain at the beginning of the period D. Unrealized intercompany gain at the end of the period b) In years subsequent to the upstream intercompany sale of non-depreciable assets, the necessary consolidated workpaper entry is debit to the A. Non-controlling interest and retained earnings (parent) accounts, and credit to the non-depreciable asset B. No entries are necessary C. Non-depreciable asset and credit to non-controlling interest and Investment in Subsidiary account. D. Retained Earnings (parent) account and credit to non-depreciable asset.
for the following intercompany transaction state the principle to be used in accounting for intercompany gains on current and future consolidated income statements: Gains on the sale of land
True or False Pls indicate if the statements are True or False. 1. All allocated excess/purchase differentials are amortized. 2. Allocated excess/purchase differential amortizations are the allocation over time of the difference between the market value and the book value of the subsidiary’s assets and liabilities at the acquisition date. 3.
The consolidated balance of fixed assets will be affected by working paper entries involving all of the following, except: A. Excess of fixed asset FV over BV of the parent at the date of acquisition B. Amortization of the excess of fixed asset FV over BV of the subsidiary at the date of acquisition C. Realized gain or loss on intercompany sale of fixed asset D. Unrealized gain or loss on intercompany sale of fixed asset
In a business combination, an acquirer's interest in the fair value of the net assetsacquired exceeds the consideration transferred in the combination. Under PFRS3 Business Combinations, the acquirer should A. reassess the recognition and measurement of the net assets acquired and theconsideration transferred, then recognize any excess immediately in othercomprehensive income B. recognize the excess immediately in other comprehensive income C. recognize the excess immediately in profit or loss D. reassess the recognition and measurement of the net assets acquired and theconsideration transferred, then recognize any excess immediately in profit or loss
1. At the date of an acquisition which resulted to either goodwill or gain on bargain purchase, the acquisition method: A. Consolidates the subsidiary's assets and liabilities at book value. B. Consolidates the subisdiary's assets at fair value and libailities at book value. C. Consolidates the subsidiary's assets at book value and liabilities at fair value. D. Consolidates the subsidiary's assets and liabilities at fair value. 2. The consideration transferred in a business combination will most likely include which of the following? A. The transaction price in an arrangement that is primarily for the benefit of the acquirer or the combined entity. B. A contingent liability with an acquisition-date fair value but imposes an improbable outflow that the acquirer assumes in a business combination. C. The "off-market" value of a reacquired right. D. The acquisition-date fair value of a contingent consideration that is dependent upon the occurrence of a possible, but not probable,…