When a subsidiary sells inventory to a parent, the intra-entity profit is removed from the subsidiary’s net income for consolidation and reduces the income allocation to the noncontrolling interest. Is the profit permanently eliminated from the noncontrolling interest, or is it merely shifted from one period to the next? Explain.

When a subsidiary sells inventory to a parent, the intra-entity profit is removed from the subsidiary’s net income for consolidation and reduces the income allocation to the noncontrolling interest. Is the profit permanently eliminated from the noncontrolling interest, or is it merely shifted from one period to the next? Explain.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter14: Intercorporate Investments In Common Stock

Section: Chapter Questions

Problem 8Q

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Non-controlling interest in consolidated income is never affected by: a. Sale of Parent to unaffiliated company b. Non-controlling interest is affected by all sales c. Downstream sales d. Upstream Sales
Starting from the separate cost of goods sold of the affiliates, the consolidated cost of goods sold will be affected by all of the following, except: A. Amortization of the excess of inventory FV over BV of the subsidiary B. Unrealized profit on ending inventory C. Excess of inventory FV over BV of the subsidiary at the date of acquisition D. Realized profit on beginning inventory
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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 ONone
Which of the following items shall be cancelled on consolidation? a. Receivables related to intra-group sales b. Payables related to intra-group purchases c. Unrealised profit on intra-group transactions d. Loans related to intra-group lending e. All of the above
Starting from the separate cost of goods sold of the affiliates, the consolidatedcost of goods sold will be affectedby all of the following, except: a.Realized profit on beginning inventoryb.Excess of inventory FV over BV of the subsidiary at the date of acquisitionc.Amortization of the excess of inventory FV over BV of the subsidiaryd. Unrealized profit on ending inventory
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When do companies break apart a sale and treat its parts differently for purposes of recognizing revenue?
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