Subsidiary
During the preparation of consolidated financial statements, the amount of subsidiary
To explain : Why are the subsidiary preferred dividends that are paid to non-affiliates are deducted from earnings in calculating the consolidated net income? When is it not appropriate to deduct subsidiary preferred dividends in computing consolidated net income
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- Which of the following does not appear in a statement of retained earnings? a. Net loss b. Prior period error c. Preference share dividend d. Other comprehensive incomearrow_forwardWhat is “comprehensive income”? Its composition varies from company to company but may include which items related to available-for-sale investments that are not included in net income?arrow_forwardUnder the cost method, dividends from the subsidiary to the parent Ⓡ a. are recognized in income when received. b. are recognized in income when declared. c. are recognized in income when paid. Od. do not affect income. Save Answerarrow_forward
- The Principle of Taxation class: What is the difference between income which is "realized" and income which is "recognized"? Which respect to gains/losses from Capital Assets like equity securities (stock), at what point is the gain realized and when is it currently recognized?arrow_forwardFor fi nancial assets classifi ed as available for sale, how are unrealized gains and losses refl ected in shareholders’ equity? C . Th ey are a component of accumulated other comprehensive income.arrow_forwardHow should negative goodwill be shown on the consolidated financial statements of the acquirer? Group of answer choices As a liability on the statement of financial position As a loss on the statement of comprehensive income As a separate amount under shareholders' equity on the statement of financial position As a gain on the statement of comprehensive incomearrow_forward
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- The fair value method of accounting for stock a.recognizes dividends as income b.requires the investment to be decreased by the reported net income of the investee c.requires the investment to be increased by the reported net income of the investee d.is only appropriate as part of a consolidationarrow_forwardWhich of the following statements is correct? Earnings and profits are exactly the same as retained earnings. Distributions paid in excess of earnings and profits are taxable to the extent of stockholder basis. Distributions of appreciated property create a gain to the stockholder recipient. A distribution from earnings and profits is a dividendarrow_forwardWhich one does not decrease retained earnings? Net loss Net income Appropriation Dividendsarrow_forward
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