
Concept explainers
a. Calculate change in book value of parent equity as a result of repurchase
Subsidiary’s purchase of shares from non-affiliate:some time subsidiary purchases treasury shares form non-controlling shareholders. The parent company may prefer not to be concerned with outside shareholders and may direct the subsidiary to reacquire any non-controlling shares that become available.
Although the parent may not participate directly when subsidiary purchases
Requirement 1
Computation of change in the book value of parent’s equity as a result of repurchase of shares by Q Manufacturing.
b. Journal entry to recognize the change in equity book value
Subsidiary’s purchase of shares from non-affiliate: some time subsidiary purchases treasury shares form non-controlling shareholders. The parent company may prefer not to be concerned with outside shareholders and may direct the subsidiary to reacquire any non-controlling shares that become available.
Although the parent may not participate directly when subsidiary purchases treasury stock, the parent’s equity in the net assets of the subsidiary may change as a result of the transaction. The change must be recognized in preparing the consolidated statements.
Requirement 2
The entry to be recorded by B advertising to recognize the change in book value of the shares held.
c. Consolidation entries
Subsidiary’s purchase of shares from non-affiliate: some time subsidiary purchases treasury shares form non-controlling shareholders. The parent company may prefer not to be concerned with outside shareholders and may direct the subsidiary to reacquire any non-controlling shares that become available.
Although the parent may not participate directly when subsidiary purchases treasury stock, the parent’s equity in the net assets of the subsidiary may change as a result of the transaction. The change must be recognized in preparing the consolidated statements.
Requirement 3
The preparation of consolidation entries immediately following the purchase of shares by Q

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Chapter 9 Solutions
Advanced Financial Accounting
- Creditors Sales Revenue 22,500 1,143,700 Land at cost 550,000 Building at cost 570,000 Furniture and fittings at cost 85,000 Bank 14,000 Provision for Depreciation Buildings 120,000 Furniture and fittings 15,000 Discounts 5,700 5,800 Retained Earnings at 1 Oct 2022 14,800 Provision for bad debts 2,200 Goodwill 400,000 Cash 16,400 Inventory at 1 Oct 2022 48,000 Rent Received(from Breezy Ltd) 27,000 Rent 7,900 Wages and Salaries 122,000 Insurance 16,300 Carriage Inwards 2,300 Returns 8,500 12,000 Commission received 5,200 8% Mortgage 100,000 Other Operating Expenses 2,500 Debtors 45,000 Purchases 340,000 Debenture Interest 1,200 Mortgage Interest 4,600 Bad debt 4,700 7% Debentures 150,000 4% Preference Shares @ $0.5 130,000 Ordinary Shares @ $0.75 375,000 General Reserves 127,000 Interim ordinary dividends paid 4,500 2,249,400 2,249,400arrow_forwardI need help with this general accounting problem using proper accounting guidelines.arrow_forwardCan you explain this general accounting question using accurate calculation methods?arrow_forward
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