Phobos Company holds 80 percent of Simons Company's voting shares. During the preparation of consolidated financial statements for 20X9, the following consolidation entry was made:| Account | Debit | Credit ||----------------------------------|--------|--------|| Investment in Simons | 40,000 | || NCI in NA of Simons | 10,000 | || Land | | 50,000 |Which of the following statements is correct?- ○ Simons Company purchased land from Phobos Company during 20X9.- ○ Phobos Company purchased land from Simons Company during 20X9.- ○ Phobos Company purchased land from Simons Company before January 1, 20X9.- ○ Simons Company purchased land from Phobos Company before January 1, 20X9.

Accounting entries made to merge the parent company's financial data with those of its subsidiaries are known as consolidation journal entries. They play a critical role in providing an integrated picture of the overall performance and financial status of the organization. These entries help to ensure that accurate consolidated financial statements are prepared and that stakeholders have a clear understanding of the group's overall financial situation. In order to ensure consistency and comparability, consolidation journal entries enable the collection and modification of subsidiary financial data to comply with the parent company's accounting principles and procedures.P Company has invested an additional $40,000 in S Company, as indicated by its investment in S Dr. 40,000. This might indicate that they raised their shareholding through the acquisition of more shares. The non-controlling stake in S's net assets has also grown by $10,000, according to the NCI in NA of S Dr. 10,000. This might imply that S's non-controlling shareholders have also gained more ownership. Land Cr. 50,000 entry shows that land valued at $50,000 has been deducted, indicating that it has been sold.Therefore, based on this information the option "S Company bought land from P Company in 20X9", is the correct answer.P Company purchased land from S Company during 20X9: The transaction does not specify P Company purchasing land from S Company. It only states that the land was disposed of. Therefore, this is an incorrect option.P Company purchased land from S Company before January 1, 20X9: The time of the land sale is not disclosed in the consolidation entry. It just displays how the transaction has affected the 20X9 consolidated financial statements. Whether the land purchase happened before or after January 1, 20x9, is not stated. Therefore, this is an incorrect option.S Company purchased land from P Company before January 1, 20X9: Information on the date of the land purchase is not included in the entry. The consolidated financial accounts for the year 20X9 are the only ones that show the impact of the transaction. Whether the land purchase took place before or after January 1, 20X9 is not made explicit. Therefore, it is an incorrect option.The explanation for incorrect options is provided above.Therefore, the option "S Company bought land from P Company in 20X9" is the correct answer.

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Accounting

Phobos Company holds 80 percent of Simons Company's voting shares. During the preparation of consolidated financial statements for 20X9, the following consolidation entry was made: Account Investment in Simons NCI in NA of Simons Land Which of the following statements is correct? Debit 40,000 10,000 O Simons Company purchased land from Phobos Company during 20X9. O Phobos Company purchased land from Simons Company during 20X9. O Phobos Company purchased land from Simons Company before January 1, 20X9. O Simons Company purchased land from Phobos Company before January 1, 20X9. Credit 50,000

Phobos Company holds 80 percent of Simons Company's voting shares. During the preparation of consolidated financial statements for 20X9, the following consolidation entry was made: Account Investment in Simons NCI in NA of Simons Land Which of the following statements is correct? Debit 40,000 10,000 O Simons Company purchased land from Phobos Company during 20X9. O Phobos Company purchased land from Simons Company during 20X9. O Phobos Company purchased land from Simons Company before January 1, 20X9. O Simons Company purchased land from Phobos Company before January 1, 20X9. Credit 50,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Phobos Company holds 80 percent of Simons Company's voting shares. During the preparation of consolidated financial statements for 20X9, the following consolidation entry was made:

| Account | Debit | Credit |
|----------------------------------|--------|--------|
| Investment in Simons | 40,000 | |
| NCI in NA of Simons | 10,000 | |
| Land | | 50,000 |

Which of the following statements is correct?

- ○ Simons Company purchased land from Phobos Company during 20X9.
- ○ Phobos Company purchased land from Simons Company during 20X9.
- ○ Phobos Company purchased land from Simons Company before January 1, 20X9.
- ○ Simons Company purchased land from Phobos Company before January 1, 20X9.

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