Answered: Which of the following regarding the… | bartleby

FINANCIAL ACCOUNTING

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Which of the following regarding the preparation of Consolidated Financial Statement is
correct?
A. Once the parent company prepares Consolidated Financial Statements, it no longer
needs to prepare financial statements for its own activities.
B. Only the subsidiaries are required to prepare Financial Statements.
C. Consolidated Financial Statements are required by the Parent Company for reporting
purposes only; each company must continue to prepare its own Financial
Statements.
D. Consolidated Financial Statements are required only when both companies are
publicly traded.

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In a consolidated statements workpaper, which items are carried forward from one section to another? Select one: a. The total of the income section to the retained earnings section and then the total of the retained earnings section to the balance sheet section. b. The eliminations must balance for each section in order to carry them forward. c. Parents retained earnings, but not Subsidiary d. Each section on the workpaper is separate, so no numbers are carried forward
What is a good response to? The unrealized intercompany profits can assuredly have an impact on the consolidated financial statements, as true profits and losses will not be recognized until inventory is sold to an unrelated entity. Prior to this third-party sale the intercompany profit or loss in unrealized and must be removed from the reports consolidation to avoid overstating the consolidated net income (Hoyle, Schaefer, & Doupnik, 2024). It is also important to determine if the inventory sale was upstream or downstream, as the considerations will vary based on the sale in relation to the parent company. For an upstream sale (subsidiary to parent company) any unrealized profit or loss can be partially allocated to non-controlling interests assuming such entities exist, and once the inventory has been resold the recognized revenue is subsequently split accordingly. During a downstream sale (parent to subsidiary company) the unrealized revenue is allocated to the parent company,…
Peer Incorporated is a publicly-traded enterprise and therefore must disclose information regarding its operating segments. Which of the following should be disclosed for each of Peer’s reportable operating segments? Multiple Choice Both profit and loss and total assets must be reported. Only profit and loss, but not total assets must be reported. Only total assets, but not profit and loss must be reported. Neither total assets, not profit and loss must be reported.

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