In which circumstance does partial recognition of intercompany profit occur? {financial accounting} a) When parent owns 100% of subsidiary b) When subsidiary sells to parent c) When parent sells to partially-owned subsidiary d) When both companies are wholly owned
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- What is answerHow is non-controlling interest in the subsidiary’s net assets presented in the consolidated statement of financial position? a. Within equity but separately from the equity of the owners of the parents. b. Within equity as part of retained earnings. c. Any of these as a matter of accounting policy choice. d. As a mezzanine item between liabilities and equity.What is the correct method for treating a vesting differential linked to the acquisition of shares? privileged rights of the subsidiary by the parent company? Select an answer: a. It must be allocated to identifiable net assets or goodwill. b. It must be distributed in proportion to the identifiable assets and liabilities of the subsidiary. c. It must be charged to consolidated retained earnings or credited to contributed surplus. d. It must be taken care of in the current year.
- Q1) When a company owns 50% or more of another company, accounting standards require that the owner (parent) consolidates its financial statements with the subsidiary. Explain the rationale and the reasons behind that requirement.Question 1 Which of the following accounts do not appear in the consolidated financial statements at consolidation? A) Goodwill. B) Equipment. C) Investment in Subsidiary. D) Common Stock. E) Additional Paid-In Capital. Question 2 Which of the following internal record-keeping methods can a parent choose to account for a subsidiary acquired in a business combination? A) initial value or book value. B) initial value, lower-of-cost-or-market-value, or equity. C) initial value, equity, or partial equity. D) initial value, equity, or book value. E) initial value, lower-of-cost-or-market-value, or partial equity.In preparing the Subsidiary company's Income distribution schedule (IDS), how is the total amount distributable to non- controlling interest calculated? [Internally generated Subsidiary's net income + Other adjustments (if any)] x Non-controlling interest (%) [Internally generated Subsidiary's net income - Full Amortization of excess from value schedule] x Non-controlling interest (%) [Internally generated Subsidiary's net income + Other adjustments (if any) - Full Amortization of excess from value schedule] x Non-controlling interest (%) [Internally generated Subsidiary's net income - Other adjustments (if any) + Full Amortization of excess] x Non- controlling interest (%)
- Under the equity method of accounting for the operating results of a subsidiary, the dividends declared by the subsidiary to the parent company are accounted for by the parent company as A. Dividend revenue on the declaration date. B. A reduction of the Investment in Subsidiary account on the payment date. C. Dividend revenue on the payment date. D. A reduction of the Investment in Subsidiary account on the declaration date.While going through the process of date alignment for Simple Equity method, how is the balance of Investment in subsidiary account calculated to return the account to its beginning of the year balance? Investment in Subsidiary + Subsidiary Income - Dividend's Declared (Subsidiary) Investment in Subsidiary - Subsidiary Income + Dividend's Declared (Subsidiary) Investment in Subsidiary - Dividend's Declared (Subsidiary) O Investment in Subsidiary + Subsidiary IncomeConsolidated Retained Earnings include: A. Consolidated Net income less any dividends declared by either the parent or subsidiary B. Consolidated Net income less any dividends declared by the parent only. C. The Parent’s net income less any dividends declared by the parent. D. The parent’s net income plus its share of subsidiary’s income less any dividends declared by either the parent or the subsidiary.
- When a parent company acquires a less-than-100 percent controlling interest in a subsidiary, what portion of that subsidiary’s financial data does the parent consolidate?Requirements: WHAT IS THE AMOUNT OF: A. Goodwill to be reported on the consolidated balance sheet on January 1, 2x19? B. Non-controlling interest on January 1, 2x19? C. Consolidated operating expenses for 2x19? D. Consolidated profit attributable to parent on December 31, 2x19? E. Non-controlling interest in profit of Subsidiary Company on December 31, 2x19? F. Non-controlling interest is to be presented in the consolidated statement of financial position on December 31, 2x19? G. Consolidated retained earnings attributable to Parent's shareholder equity on December 31, 2x19? H. Total consolidated assets on December 31, 2x19?