Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Chapter 2, Problem 2.15Q
To determine
Concept introduction: The business combination is a process where two entities merge to take the benefit of synergies for a common goal.
To explain: The reason to record the beginning of retained earnings balance for each company in the three-part consolidation worksheet rather than just the ending balance.
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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
When the income statement includes discontinued operations, which amounts require per share presentation?
How are intra-entity inventory gross profits created, and what consolidation entries does the presence of these gross profits necessitate?
Chapter 2 Solutions
Advanced Financial Accounting
Ch. 2 - What types of investments in common stock normally...Ch. 2 - Prob. 2.2QCh. 2 - Describe an investor’s treatment of an investment...Ch. 2 - How is the receipt of a dividend recorded under...Ch. 2 - How does carrying securities at fair value...Ch. 2 - Prob. 2.6QCh. 2 - Prob. 2.7QCh. 2 - Prob. 2.8QCh. 2 - Prob. 2.9QCh. 2 - Prob. 2.10Q
Ch. 2 - How are a subsidiary’s dividend declarations...Ch. 2 - Prob. 2.12QCh. 2 - Give a definition of consolidated retained...Ch. 2 - Prob. 2.14QCh. 2 - Prob. 2.15QCh. 2 - Prob. 2.16AQCh. 2 - When is equity method reporting considered...Ch. 2 - How does the fully adjusted equity method differ...Ch. 2 - What is the modified equity method? When might a...Ch. 2 - Choice of Accounting Method Slanted Building...Ch. 2 - Prob. 2.2CCh. 2 - Prob. 2.3CCh. 2 - Prob. 2.4CCh. 2 - Prob. 2.5CCh. 2 - Prob. 2.6CCh. 2 - Prob. 2.1.1ECh. 2 - Multiple-Choice Questions on Accounting for Equity...Ch. 2 - Prob. 2.1.3ECh. 2 - Prob. 2.1.4ECh. 2 - Multiple-Choice Questions on Intercorporate...Ch. 2 - Prob. 2.2.2ECh. 2 - Prob. 2.3.1ECh. 2 - Prob. 2.3.2ECh. 2 - Prob. 2.3.3ECh. 2 - Prob. 2.4ECh. 2 - Acquisition Price Phillips Company bought 40...Ch. 2 - Prob. 2.6ECh. 2 - Prob. 2.7ECh. 2 - Carrying an investment at Fair Value versus Equity...Ch. 2 - Carrying an Investment at Fair Value versus Equity...Ch. 2 - Prob. 2.10ECh. 2 - Prob. 2.11ECh. 2 - Prob. 2.12ECh. 2 - Prob. 2.13ECh. 2 - Income Reporting Grandview Company purchased 40...Ch. 2 - Investee with Preferred Stock Outstanding Reden...Ch. 2 - Prob. 2.16AECh. 2 - Prob. 2.17AECh. 2 - Changes ¡n the Number of Shares Held Idle...Ch. 2 - Investments Carried at Fair Value and Equity...Ch. 2 - Carried at Fair Value Journal Entries Marlow...Ch. 2 - Consolidated Worksheet at End of the First Year of...Ch. 2 - Consolidated Worksheet at End of the Second Year...Ch. 2 - Prob. 2.23PCh. 2 - Prob. 2.24PCh. 2 - Prob. 2.25APCh. 2 - Equity-Method income Statement Wealthy...Ch. 2 - Prob. 2.27BPCh. 2 - Prob. 2.28BP
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- Consolidation accountinga. eliminates all liabilities.b. reports the receivables and payables of the parent company only.c. combines the accounts of the parent company and its subsidiary companies.d. all of the abovearrow_forwardK Consolidation accounting *** O A. reports the receivables and payables of the parent company only. OB. eliminates all liabilities. C. combines the accounts of the parent company and those of its subsidiary companies. D. all of the above.arrow_forwardHow is the amount assigned to the non-controlling interest normally determined when a consolidated balance sheet is prepared immediately after a business combination?arrow_forward
- When we are preparing consolidated financial statements, will the financial statements of the parent entity, or the subsidiary companies, as at the beginning of the financial period reflect prior consolidation adjustments? Why?arrow_forwardWhich consolidation method should be used in preparing consolidated financial statements in accordance with IFRS? A. Proportionate consolidation method.B. Either identifiable net assets or fair value enterprise method.C. New entity method.D. Parent company method.arrow_forwardWhy must the eliminating entries be entered in the consolidation worksheet each time consolidated statements are prepared?How is the beginning-of-period non-controlling interest balance determined?How is the end-of-period non-controlling interest balance determined? Provide an example.arrow_forward
- If a company prepares a consolidated income statement, IFRS requires that net income be reported O for the subsidiary companies only. for both the parent company and the subsidiary companies. O as a single amount only. O for the parent company only.arrow_forwardConsolidation financial statements are prepared when a parent-subsidiary relationship exists in recognition of the accounting principle concept of: a. Reliability b. Entity c. Materiality d. Going Concernarrow_forwardExplain why consolidated entities defer intra-entity gross profit in ending inventory and the consolidation procedures required subsequently to recognize profits.arrow_forward
- List the types of intercompany revenue and expenses that are eliminated in the preparation of a consolidated income statement and indicate the effect that each elimination has on the amount of net income attribute to non-controlling interestarrow_forwardFollowing the completion of a business combination in the form of a statutory consolidation, what is the balance in the new corporation’s Retained earnings account? A. The sum of the acquirer and acquiree retained earnings account balances. B. The acquirer retained earnings account balance C. Zero D. The acquiree retained earnings account balancearrow_forwardWhich of the following is not a change in reporting entity? 26 Multiple Choice 01-59-33 Reporting using comparative financial statements for the first time. Presenting consolidated financial statements for the first time. Changing the companies that comprise a consolidated group. All are changes in reporting entity. 身arrow_forward
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