Indicate whether the statements below are TRUE or FALSE. Explanations not needed. TRUE or FALSE:1. If the entire company center is the subsidiary, it is the subsidiary's income thatneeds adjustment.2. The amount of intercompany profit subject to elimination is calculated on thebasis of the buyer's affiliate's gross profit rate stated as a percentage of cost.3. Intercompany sales of inventory necessitate adjustments to the calculation of thedistribution of income to the controlling interest.4. The realization process depends on the type of the property, plant and equipment-if the property, plant and equipment are non-depreciable, the realization of a gainor loss on an intercompany sale must await the property, plant and equipment'sresale to outsiders; if the property. Plant and equipment are depreciable, therealization of gain or loss on an intercompany sale occurs on a piece meal basisover the remaining useful life of the property, plant and equipment.5. Unrealized intercompany gains or losses involving the non-depreciable assets areviewed as being realized gradually over the remaining life of the asset as it is usedby the purchasing affiliate.6. Non-controlling interest in subsidiary's net income is never affected by a gain onthe transfer of depreciable asset.7. When change in estimated life of depreciable asset occurs at the time of anintercompany sales, the treatment is different than if the change occurred whilethe asset remained on the books of the selling affiliate.

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ndicate whether the statements below are TRUE or FALSE. Explanations not needed

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Indicate whether the statements below are TRUE or FALSE. Explanations not needed.

TRUE or FALSE:
1. If the entire company center is the subsidiary, it is the subsidiary's income that
needs adjustment.
2. The amount of intercompany profit subject to elimination is calculated on the
basis of the buyer's affiliate's gross profit rate stated as a percentage of cost.
3. Intercompany sales of inventory necessitate adjustments to the calculation of the
distribution of income to the controlling interest.
4. The realization process depends on the type of the property, plant and equipment-
if the property, plant and equipment are non-depreciable, the realization of a gain
or loss on an intercompany sale must await the property, plant and equipment's
resale to outsiders; if the property. Plant and equipment are depreciable, the
realization of gain or loss on an intercompany sale occurs on a piece meal basis
over the remaining useful life of the property, plant and equipment.
5. Unrealized intercompany gains or losses involving the non-depreciable assets are
viewed as being realized gradually over the remaining life of the asset as it is used
by the purchasing affiliate.
6. Non-controlling interest in subsidiary's net income is never affected by a gain on
the transfer of depreciable asset.
7. When change in estimated life of depreciable asset occurs at the time of an
intercompany sales, the treatment is different than if the change occurred while
the asset remained on the books of the selling affiliate.

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