Test bank and solution of reporting intercorporeate investments and consolidation (1)
➤ Gửi thông báo lỗi ⚠️ Báo cáo tài liệu vi phạmNội dung chi tiết: Test bank and solution of reporting intercorporeate investments and consolidation (1)
Test bank and solution of reporting intercorporeate investments and consolidation (1)
Chapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with noDifferentialCHAPTER 2REPORTING INTERCORPORATE Test bank and solution of reporting intercorporeate investments and consolidation (1) INVESTMENTS AND CONSOLIDATION OF WHOLLYOWNED SUBSIDIARIES WITH NO DIFFERENTIALANSWERS TO QUESTIONSQ2-1 (a) An investment in the voting common stock of another company is reported on an equity-method basis when the investor is able to significantly influence the operating and financial policies of t Test bank and solution of reporting intercorporeate investments and consolidation (1)he investee.(b) The cost method normally is used for investments in common stock when the investor does not have significant influence and for investmTest bank and solution of reporting intercorporeate investments and consolidation (1)
ents in preferred stock and other securities. The cost method may also be used by the parent company for bookkeeping purposes when the investor owns aChapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with noDifferentialCHAPTER 2REPORTING INTERCORPORATE Test bank and solution of reporting intercorporeate investments and consolidation (1)s the ability to influence the operating and financial policies of the investee. Representation on the board of directors of the investee IS perhaps the strongest evidence, but other evidence such as routine participation in management decisions or entering into formal agreements that give the inves Test bank and solution of reporting intercorporeate investments and consolidation (1)tor some degree of influence over the investee also may be used.Q2-3’ Equity-method reporting should not be used when (a) the investee has initiated lTest bank and solution of reporting intercorporeate investments and consolidation (1)
itigation or complaints challenging the investor's ability to exercise significant influence, (b) the investor signs an agreement surrendering importaChapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with noDifferentialCHAPTER 2REPORTING INTERCORPORATE Test bank and solution of reporting intercorporeate investments and consolidation (1) the investor is not able to acquire the information from the investee, or (e) the investor tries and fails to gain representation on the board of directors.Q2-4 The balances will be the same at the date of acquisition and in the periods that follow whenever the cumulative dividends paid by the inve Test bank and solution of reporting intercorporeate investments and consolidation (1)stee equal or exceed the investee's cumulative earnings since the date of acquisition. The latter case assumes there are no other adjustments needed uTest bank and solution of reporting intercorporeate investments and consolidation (1)
nder the equity method for amortization of differential or other factors.Q2-5 When a company has used the cost method and purchases additional shares Chapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with noDifferentialCHAPTER 2REPORTING INTERCORPORATE Test bank and solution of reporting intercorporeate investments and consolidation (1) periods. Dividend income IS replaced by income from the investee and dividends received are treated as an adjustment to the investment account.Q2-6 An investor considers a dividend to be a liquidating dividend when the cumulative dividends received from the investee exceed a proportionate share of Test bank and solution of reporting intercorporeate investments and consolidation (1)the cumulative earnings of the investee from the date ownership was acquired. For example, an investor would consider a dividend to be liquidating ifTest bank and solution of reporting intercorporeate investments and consolidation (1)
it purchases shares of another company in early December and receives a dividend at year-end substantially in excess of its portion of the investee's Chapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with noDifferentialCHAPTER 2REPORTING INTERCORPORATE Test bank and solution of reporting intercorporeate investments and consolidation (1) distribution 111 anymanner. Tlus document may not be copied, scanned. duplicated, forwarded. distributed. or posted on a website, in whole or part.Chapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with noDifferentialQ2-7 Liquidating dividends decrease Test bank and solution of reporting intercorporeate investments and consolidation (1)the investment account in both cases. All dividends are treated as a reduction of the investment account when equity-method reporting IS used. When thTest bank and solution of reporting intercorporeate investments and consolidation (1)
e cost method is used and dividends are received in excess of a proportionate share of investee earnings since acquisition, they are treated as a reduChapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with noDifferentialCHAPTER 2REPORTING INTERCORPORATE Test bank and solution of reporting intercorporeate investments and consolidation (1)s a liquidating dividend, it is treated as dividend income under the cost method.Q2-9 Dividends received by the investor are recorded as dividend income under both the cost and fair value methods. The change in the fair value of the shares held by the investor IS recorded as an unrealized gain or lo Test bank and solution of reporting intercorporeate investments and consolidation (1)ss under the fair value method. The fair value method differs from the equity method in two respects Under the equity method the investor’s share of tTest bank and solution of reporting intercorporeate investments and consolidation (1)
he earnings of the investee are included as investment income and dividends received from the investee are treated as a reduction of the investment acChapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with noDifferentialCHAPTER 2REPORTING INTERCORPORATE Test bank and solution of reporting intercorporeate investments and consolidation (1)nd an appropriate amount of any differential is amortized each period. In some situations, companies also choose not to make adjustments for intercompany profits and the amortization of the differential. Under the fully adjusted equity method, the parent's books also are adjusted for unrealized prof Test bank and solution of reporting intercorporeate investments and consolidation (1)its and any other Items that are needed to bring the investor s net income into agreement with the income to the controlling interest that would be reTest bank and solution of reporting intercorporeate investments and consolidation (1)
ported if consolidation were used.Q2-11 A one-line consolidation implies that under equity-method reporting the investor's net income and stockholdersChapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with noDifferentialCHAPTER 2REPORTING INTERCORPORATE Test bank and solution of reporting intercorporeate investments and consolidation (1)t and the investment is reported as a single line in the investor's balance sheet.Q2-12* The term modified equity method generally IS used when the investor records Its portion of the reported net income and dividends of the investee and amortizes an appropriate portion of any differential. Unlike t Test bank and solution of reporting intercorporeate investments and consolidation (1)he fully adjusted equity method, no adjustment for unrealized profit on intercompany transfers normally is made on the investor's books. (In some situTest bank and solution of reporting intercorporeate investments and consolidation (1)
ations, companies also choose not to amortize the differential.) When an investee IS consolidated for financial reporting purposes, the investor may nChapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with noDifferentialCHAPTER 2REPORTING INTERCORPORATE Test bank and solution of reporting intercorporeate investments and consolidation (1)ccount must be eliminated in preparing the consolidated statements.Q2-13* The investor reports a proportionate share of an investee’s extraordinary item as an extraordinary Item in Its own income statement.Q2-14 An adjusting entry is recorded on the company's books and causes the balances reported b Test bank and solution of reporting intercorporeate investments and consolidation (1)y the parent or subsidiary company to change. Eliminating entries, on the other hand, are not recorded on the books of the companies. Instead, they arTest bank and solution of reporting intercorporeate investments and consolidation (1)
e entered in the consolidation worksheet so that when the amounts included in the eliminating entries are applied, the appropriate balances for the coChapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with noDifferentialCHAPTER 2REPORTING INTERCORPORATE Test bank and solution of reporting intercorporeate investments and consolidation (1) tor saleTest bank and solution of reporting intercorporeate investments and consolidation (1)
y accounts of the consolidated entity. That portion of the stockholders' equity claim assigned to the noncontrolling shareholders is reported indirectChapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with noDifferentialCHAPTER 2REPORTING INTERCORPORATE Test bank and solution of reporting intercorporeate investments and consolidation (1)ngs statement effects of intercorporate ownership and any transfers of goods and services between related companies.Q2-17 Separate parts of the consolidation worksheet are used to develop the consolidated income statement, retained earnings statement, and balance sheet. All eliminating entries neede Test bank and solution of reporting intercorporeate investments and consolidation (1)d to complete the entire worksheet normally are entered before any of the three statements are prepared. The income statement portion of the worksheetTest bank and solution of reporting intercorporeate investments and consolidation (1)
is completed first so that net income can be carried forward to the retained earnings statement portion of the worksheet. When the retained earnings Chapter 02 - Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries with noDifferentialCHAPTER 2REPORTING INTERCORPORATE Test bank and solution of reporting intercorporeate investments and consolidation (1) dividends declared by the subsidiary are included in the consolidated retained earnings statement. Those which are paid to the parent have not gone outside the consolidated entity and therefore must be eliminated in preparing the consolidated statements.Q2-19 Consolidated net income includes 100 pe Test bank and solution of reporting intercorporeate investments and consolidation (1)rcent of the revenues and expenses of the individual consolidating companies arising from transactions with unaffiliated companies.Q2-20 ConsolidatedTest bank and solution of reporting intercorporeate investments and consolidation (1)
retained earnings is that portion of the undistributed earnings of the consolidated entity accruing to the parent company shareholdersGọi ngay
Chat zalo
Facebook