Statement 1: Non-controlling interest in subsidiary's net income is never affected by a gain on the transfer of depreciable asset. Statement 2: When change in the estimated life of depreciable assests occurs at the time of an intercompany sales, the treatment is different than if the change occured while the asset remained on the books of the selling affiliate .
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Statement 1: Non-controlling interest in subsidiary's net income is never affected by a gain on the transfer of
Statement 2: When change in the estimated life of depreciable assests occurs at the time of an intercompany sales, the treatment is different than if the change occured while the asset remained on the books of the selling affiliate .
Which statement/s is TRUE?
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- (CO 3) Which of the following statements is true concerning an intra-entity transfer of a depreciable asset? Group of answer choices Net income attributable to the non-controlling interest is never affected by a gain on the transfer. Net income attributable to the non-controlling interest is always affected by a gain on the transfer. Net income attributable to the non-controlling interest is affected by a downstream gain only Net income attributable to the non-controlling interest is affected only when the transfer is upstream. Net income attributable to the non-controlling interest is increased by an upstream gain in the year of transfer.How shall an acquirer in a business combination account for the changes in fair value contingent consideration classified as equity instrument if the changes result from events after the acquisition date? a. The changes in fair value of contingent consideration classified as equity shall be recognized as gain or loss in profit or loss because they are not measurement period adjustments. b. Contingent consideration classified as equity shall not be re-measured and its subsequent settlement shall be accounted for within equity. c. The changes in fair value of contingent consideration classified as equity shell be retrospectively restated to beginning retained earnings because they are prior period error. d. The change in fair value of contingent consideration classified as equity shall be retroactively adjusted to goodwill/gain on bargain purchase because they are measurement period adjustments.Statement I. Upon consolidation, the goodwill account should be debited in the elimination entry if the consideration transferred, previously held interest, and non-controlling interest are less than the fair value of net assets acquired.Statement II. In a net asset acquisition, the acquirer should recognize the goodwill as an asset in its separate financial statements. a. Both statements are true. b. Both statements are false. c. Statement I is true; Statement II is false. d. Statement I is false; Statement II is true.
- 7.) If the amount paid by an investor (parent) is less than the proportional total of the estimated fair value of investee's (subsidiary's) assets acquired and liabilities assumed, the difference is recorded as ... a. Negative goodwill in the balance sheet of the investor. b. Gain from a bargain purchase in the income statement of the investor. Gain from a bargain purchase in the income statement of the investee. d. Allocated as a reduction to each of the asset and liability accounts when applying consolidation accounting by the investor. c.When the price paid to acquire another firm is lower than the fair value of its identifiable net assets, the difference should be considered as: Select one: O Goodwill an increase to the subsidiary's assets and liabilities O. An ordinary gain ONoneWhen 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
- In reference to the downstream or upstream sale of depreciable assets, which of the following statements is correct? A. Gains and losses appear in the parent-company accounts in the year of sale and must be eliminated by the parent company determining its investment income under equity method of accounting. B. The initial effect of unrealized gains and losses from downstream sales of depreciable asset is different from the sale of non-depreciable assets. C. Gains, but not losses, appear in the parent-company accounts in the year of sale and must be eliminated by the parent company in determining its investment income under the equity method of accounting. D. Upstream sales from the subsidiary to the parent company always result in unrealized gains or losses.During an acquisition, when should intangible assets NOT be recognized apart fromGoodwill?A. The assets have been identified but not accounted for by the subsidiary.B. The assets have been identified and accounted for by the subsidiary.C. The assets can be sold, licensed or exchanged.D. The assets have been accounted for by the subsidiary but have no Fair Value on thedate of acquisition.True or False Pls indicate if the statements are true or false. 1. The worksheet eliminations prepared subsequent to acquisition remove the allocated excess/purchase differential amortizations from the consolidated financial statements. 2. Allocated excess/purchase differential amortizations result in the Investment Income account disclosing the income that would have been allocated to the parent had the subsidiary’s financial records disclosed the market value of its assets and liabilities. 3.
- An intra- entity transfer of a depreciable asset took place whereby the transfer price exceeded the book value of the asset. Which statement is true with respect to the year following the year in which the transfer occurred? Multiple Choice A worksheet entry is made with a debit to gain for an upstream transfer. A worksheet entry is made with a debit to investment in subsidiary for a downstream transfer when the parent uses the equity method. No worksheet entry is necessary. A worksheet entry is made with a debit to retained earnings for a downstream transfer, regardless of the method used account for the investment. A worksheet entry is made with a debit to gain for a downstream transfer.Which of the following is not an application of the acquisition method?a) Measuring the consideration transferred at fair value.b) Determining the acquisition date which is the date the acquirer obtains control over acquiree.c) Identifying the acquirer which is the entity that obtains control over another business in a business combination.d) Measuring the non-controlling interest at the NCI’s proportionate share in the acquiree’s net identifiable assets or fair value, whichever is higher.S1: Under the acquisition method, if the fair values of identifiable net assetsexceed the value implied by the purchase price of the acquired company, theexcess should be accounted for goodwill. S2: With an acquisition, direct andindirect expenses are considered a par of the total cost of the acquiredcompany. A. Only S1 is correct.B. Both statements are correct.C. Both statements are incorrect.D. Only S2 is correct.