Reciprocal ownership: A reciprocal relationship is when two companies hold stock in each other. It is rare in practice. The method of dealing with reciprocal relationships found mostly in the treasury stock method. Under treasury stock method, purchases of a parent’s stock by subsidiary are treated in the same way as if parent had repurchased its own stock and was holding it in the treasury. The subsidiary will account it as investment in parent’s stock using the cost method as such investments usually are small and almost never has the ability to significantly influence parent. Income assigned to the non-controlling interest in the subsidiary should be based on the subsidiary’s separate income excluding the dividend income from investment in the parent. The parent normally bases its equity-method share of the subsidiary’s excluding dividends from parent. Computation of the amounts reported as consolidated net income and income assigned to controlling interest under treasury method.

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Answer 1

Question

Chapter 9, Problem 9.10E

To determine

Reciprocal ownership:A reciprocal relationship is when two companies hold stock in each other. It is rare in practice. The method of dealing with reciprocal relationships found mostly in the treasury stock method. Under treasury stock method, purchases of a parent’s stock by subsidiary are treated in the same way as if parent had repurchased its own stock and was holding it in the treasury. The subsidiary will account it as investment in parent’s stock using the cost method as such investments usually are small and almost never has the ability to significantly influence parent.

Income assigned to the non-controlling interest in the subsidiary should be based on the subsidiary’s separate income excluding the dividend income from investment in the parent. The parent normally bases its equity-method share of the subsidiary’s excluding dividends from parent.

Computation of the amounts reported as consolidated net income and income assigned to controlling interest under treasury method.

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Explanation: Question:A company has the following information: Beginning Inventory: $50,000Purchases: $120,000Ending Inventory: $60,000The company uses the periodic inventory system. What is the cost of goods sold (COGS) for the period?

Answer 2

Question

Chapter 9, Problem 9.10E

To determine

Reciprocal ownership:A reciprocal relationship is when two companies hold stock in each other. It is rare in practice. The method of dealing with reciprocal relationships found mostly in the treasury stock method. Under treasury stock method, purchases of a parent’s stock by subsidiary are treated in the same way as if parent had repurchased its own stock and was holding it in the treasury. The subsidiary will account it as investment in parent’s stock using the cost method as such investments usually are small and almost never has the ability to significantly influence parent.

Income assigned to the non-controlling interest in the subsidiary should be based on the subsidiary’s separate income excluding the dividend income from investment in the parent. The parent normally bases its equity-method share of the subsidiary’s excluding dividends from parent.

Computation of the amounts reported as consolidated net income and income assigned to controlling interest under treasury method.

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Answer 3

Question

Chapter 9, Problem 9.10E

To determine

Reciprocal ownership:A reciprocal relationship is when two companies hold stock in each other. It is rare in practice. The method of dealing with reciprocal relationships found mostly in the treasury stock method. Under treasury stock method, purchases of a parent’s stock by subsidiary are treated in the same way as if parent had repurchased its own stock and was holding it in the treasury. The subsidiary will account it as investment in parent’s stock using the cost method as such investments usually are small and almost never has the ability to significantly influence parent.

Income assigned to the non-controlling interest in the subsidiary should be based on the subsidiary’s separate income excluding the dividend income from investment in the parent. The parent normally bases its equity-method share of the subsidiary’s excluding dividends from parent.

Computation of the amounts reported as consolidated net income and income assigned to controlling interest under treasury method.

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Answer 4

Question

Chapter 9, Problem 9.10E

To determine

Reciprocal ownership:A reciprocal relationship is when two companies hold stock in each other. It is rare in practice. The method of dealing with reciprocal relationships found mostly in the treasury stock method. Under treasury stock method, purchases of a parent’s stock by subsidiary are treated in the same way as if parent had repurchased its own stock and was holding it in the treasury. The subsidiary will account it as investment in parent’s stock using the cost method as such investments usually are small and almost never has the ability to significantly influence parent.

Income assigned to the non-controlling interest in the subsidiary should be based on the subsidiary’s separate income excluding the dividend income from investment in the parent. The parent normally bases its equity-method share of the subsidiary’s excluding dividends from parent.

Computation of the amounts reported as consolidated net income and income assigned to controlling interest under treasury method.

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Answer 5

Chapter 9, Problem 9.10E

To determine

Reciprocal ownership:A reciprocal relationship is when two companies hold stock in each other. It is rare in practice. The method of dealing with reciprocal relationships found mostly in the treasury stock method. Under treasury stock method, purchases of a parent’s stock by subsidiary are treated in the same way as if parent had repurchased its own stock and was holding it in the treasury. The subsidiary will account it as investment in parent’s stock using the cost method as such investments usually are small and almost never has the ability to significantly influence parent.

Income assigned to the non-controlling interest in the subsidiary should be based on the subsidiary’s separate income excluding the dividend income from investment in the parent. The parent normally bases its equity-method share of the subsidiary’s excluding dividends from parent.

Computation of the amounts reported as consolidated net income and income assigned to controlling interest under treasury method.

Answer 6

Chapter 9, Problem 9.10E

To determine

Reciprocal ownership:A reciprocal relationship is when two companies hold stock in each other. It is rare in practice. The method of dealing with reciprocal relationships found mostly in the treasury stock method. Under treasury stock method, purchases of a parent’s stock by subsidiary are treated in the same way as if parent had repurchased its own stock and was holding it in the treasury. The subsidiary will account it as investment in parent’s stock using the cost method as such investments usually are small and almost never has the ability to significantly influence parent.

Income assigned to the non-controlling interest in the subsidiary should be based on the subsidiary’s separate income excluding the dividend income from investment in the parent. The parent normally bases its equity-method share of the subsidiary’s excluding dividends from parent.

Computation of the amounts reported as consolidated net income and income assigned to controlling interest under treasury method.

Answer 7

Chapter 9, Problem 9.10E

To determine

Reciprocal ownership:A reciprocal relationship is when two companies hold stock in each other. It is rare in practice. The method of dealing with reciprocal relationships found mostly in the treasury stock method. Under treasury stock method, purchases of a parent’s stock by subsidiary are treated in the same way as if parent had repurchased its own stock and was holding it in the treasury. The subsidiary will account it as investment in parent’s stock using the cost method as such investments usually are small and almost never has the ability to significantly influence parent.

Income assigned to the non-controlling interest in the subsidiary should be based on the subsidiary’s separate income excluding the dividend income from investment in the parent. The parent normally bases its equity-method share of the subsidiary’s excluding dividends from parent.

Computation of the amounts reported as consolidated net income and income assigned to controlling interest under treasury method.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 9 - Prob. 9.1Q Ch. 9 - Prob. 9.2Q Ch. 9 - Prob. 9.3Q Ch. 9 - Prob. 9.4Q Ch. 9 - Prob. 9.5Q Ch. 9 - Prob. 9.6Q Ch. 9 - Prob. 9.7Q Ch. 9 - Prob. 9.8Q Ch. 9 - Prob. 9.9Q Ch. 9 - Prob. 9.10Q

Solution Summary: The author explains the method of dealing with reciprocal relationships found mostly in the treasury stock method.

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Chapter 9 Solutions