Concept explainers
Concept Introduction:
The intercompany transactions occur when the unit of legal entity is having transactions with another unit of the similar entity. This transaction can be divided into two categories such as direct and indirect intercompany transfer. The direct transfer occurs when there is transfer between the different units of the same entity and indirect transfer occurs when the unit of entity acquires debt or assets issued to unrelated entity through another unit of the same entity. This type of transfer will help the entity in improving the flow of finance and asset in efficient manner.
Requirement 1
The change in the amount of net income when intercompany services are eliminated in preparing the consolidated statement.
Concept Introduction:
The intercompany transactions occur when the unit of legal entity is having transactions with another unit of the similar entity. This transaction can be divided into two categories such as direct and indirect intercompany transfer. The direct transfer occurs when there is transfer between the different units of the same entity and indirect transfer occurs when the unit of entity acquires debt or assets issued to unrelated entity through another unit of the same entity. This type of transfer will help the entity in improving the flow of finance and asset in efficient manner.
Requirement 2
The impact of eliminating the intercompany service on the consolidated net income when entity is owing 100% of the other entity.
Concept Introduction:
The intercompany transactions occur when the unit of legal entity is having transactions with another unit of the similar entity. This transaction can be divided into two categories such as direct and indirect intercompany transfer. The direct transfer occurs when there is transfer between the different units of the same entity and indirect transfer occurs when the unit of entity acquires debt or assets issued to unrelated entity through another unit of the same entity. This type of transfer will help the entity in improving the flow of finance and asset in efficient manner.
Requirement 3
We have to determine the cost of providing health care services to its own employees..
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Chapter 7 Solutions
EBK ADVANCED FINANCIAL ACCOUNTING
- Swifty Corporation received a check for $18240 on July 1 which represents a 6 month advance payment of rent on a building it rents to a client. Unearned Rent Revenue was credited for the full $18240. Financial statements will be prepared on July 31. Swifty should make the following adjusting entry on July 31: debit Unearned Rent Revenue, $18240; credit Rent Revenue, $18240. debit Cash, $18240; credit Rent Revenue, $18240. debit Rent Revenue, $3040; credit Unearned Rent Revenue, $3040. debit Unearned Rent Revenue, $3040; credit Rent Revenue, $3040.arrow_forwardThe policy at Kingbird, Inc. is to record all office supplies as an asset at the time of purchase. On the last day of the accounting period, there are $1250 of office supplies on hand and the balance in the Supplies account is $3990. The adjusting journal entry would include A. a credit to Supplies for $1250. B, a debit to Supplies Expense for $1250. C. a credit to Supplies Expense for $2740. D. a credit to Supplies for $2740.arrow_forwardYou are the partner-in-charge of a large metropolitan office of a regional public accounting firm. Two members of your professional staff have come to you to discuss problems that may affect the firm's independence. Neither of these situations has been specifically answered by the AICPA Professional Ethics Division. Case 2: Mary Reed, a new staff auditor with the firm, has recently separated from her husband. Mary has filed for divorce, but the divorce cannot become final for at least five months. The property settlement is being bitterly contested. Mary's husband has always resented her professional career and has just used community property to acquire one share of common stock in each of the publicly owned companies audited by the office in which Mary works. 1. What arguments would indicating that the firm's independence has not been impaired? 2. What arguments would indicating that the firm's independence has been impaired? 3. Which argument from part (a) or part (b) is the most…arrow_forward
- The unadjusted trial balance for Blue Spruce Corp. appears as follows: Blue Spruce Corp. Trial Balance December 31, 2025 Cash Accounts Receivable Prepaid Insurance Supplies Equipment $370 647 102 223 4960 Accumulated Depreciation - Equipment $740 Accounts Payable 476 Common Stock 1490 Retained Earnings 1740 Service Revenue 3716 Salaries and Wages Expense 1240 Rent Expense 620 $8162 $8162 If on December 31, 2025, the expired prepaid insurance amounted to $25, the adjusting entry would include a debit to Prepaid Insurance for $77. debit to Prepaid Insurance for $25. O debit to Insurance Expense for $25. ○ credit to Prepaid Insurance for $77.arrow_forwardI want to correct answer general accounting questionarrow_forwardKindly help me with accounting questionsarrow_forward
