Term
| Generally accepted accounting principles require a U.S. corportation to disclose the following disaggregated information for each operating segment, except: |
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Definition
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Term
| Which one of the following items must be disclosed for all reportable operating segments in the notes to financial statements? (I.) Revenue from external customers. (II) Total Segment Assets (III.) Revenues from foreign customers, identified by country. |
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Definition
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Term
| Which test must a company use to determine which operating segments require seperate disclosure? |
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Definition
| Revenue test, profit or loss test, and asset test |
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Term
| Which of the following is not one of the criteria management should consider in determining whether business activities and environments of an operating segment are similar? |
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Definition
| The geographical location of the operations. |
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Term
| Which of the following statements is false concerning the number of operating segments that should be disclosed? |
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Definition
| Even though an operating segment has been reportable in the past and is of continuing significane, it must meet at least one of the three reporting test to report separately in the current year. |
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Term
| Which one of the following items is not required to be disclosed for each operating segment? |
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Definition
| Factors used to allocate company-wide expenses. |
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Term
| The following items are required to be disclosed for each operating segment except: |
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Definition
| Factors used to allocate company-wide pension expense. |
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Term
| Which of the folling statements is true according to U.S. GAAP regarding segment or enterprise-wide disclosure? |
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Definition
| Segment information does not have to be in accordance with generally accepted accounting principles. |
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Term
| Which of the following is a criterion for determining whether an operating segment is separately reportable? |
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Definition
| An operating segment's assets are 10 percent or more of combines segment assets. |
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Term
| Which of the follwing operating segment disclosures is not required by U.S GAAP? |
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Definition
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Term
| ABC Corporation has a fan products operating segment. Which of the following items does ABC not have to report for this segment? |
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Definition
| Research and development expense. |
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Term
| Which of the following is not true for an operating segment according to U.S. GAAP? |
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Definition
| An organizational unit can not be an operating segment if all of its operating trasactions are only with other segments of the organization. |
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Term
| Which of the following statements is true? |
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Definition
| In determining reportable segments, three tests are applied and only onw must be met. |
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Term
| According to U.S. GAAP, which of the following would be an acceptable grouping by a U.S. company for presentation of information by geographic area? |
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Definition
| United States, Canada, Mexico, Germany |
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Term
| Which of the following would be an acceptable grouping for a U.S. company to provide information by geographic are? |
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Definition
| United States, All Other Countries |
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Term
| What information does U.S. GAAP require to be disclosed for a major customer? |
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Definition
| The operating segment reporting sales to the customer. |
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Term
| How should revenues be recognized in interim periods? |
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Definition
| In the same way as they are recognized on an annual basis. |
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Term
| Which of the following is not correct regarding inventory procedures reported in an interim financial statements? |
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Definition
| FIFO is remeasured using the LIFO method in an interim financial statement. |
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Term
| ABC, Inc. incurred a flood loss during the first quarter of 2011 that is deemed both unusual and infrequent. The loss is considered immaterial to the twelve-month period, but is material in amount relative to the first quarter. The proper accounting treatment in the first quarter interim statement is to: |
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Definition
| Record the loss in the first quarter, but not as an extraordinary loss, and disclose the loss in a separate note or in the income statement as a separate line item. |
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Term
| Which of the following is not a required disclosire in an interim financial report? |
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Definition
| Gains on sales of major equipment. |
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Term
| Which of the following is not a required disclosure in an interim financial report? |
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Definition
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Term
| Which of the following items of information are required to be included in interim reports for each operating segment? (I.) Revenues from external customers (II.) Segment profit or loss (III.) Reconciliation of segmenet profit or loss to the enterprise's total income before taxes (IV.) Intersegment revenues |
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Definition
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Term
| How are extraordinary gains reported in a third quarter interim financial report? |
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Definition
| Recognized in the third quarter. |
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Term
| What are the two approaches that can be followed in preparing interim reports? |
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Definition
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Term
| Which of the following is reported for interim financial reports using the discrete approach? |
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Definition
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Term
| How should seasonal revenues be reported in an interim financial statement? |
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Definition
| The seasonal nature should be disclosed, and a supplemental report for the 12-month period ended at the interim date should supplement the interim report. |
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Term
| Which of the following are required to be disclosed in interim reports? |
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Definition
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Term
| What is the appropriate treatment in an interim financial report for inventory that has market value below cost? |
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Definition
| The loss should be recorded in the interim period in which market value drops below cost if the loss is considered permanent. |
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Term
| What is the appropriate treatment in an interim financial report for inventory that has cost below market value? |
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Definition
| There is no loss to report. |
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Term
| Which of the following statements is true regarding the reporting of revenues in an interim report? |
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Definition
| Revenues should be recognized in interim reports in the same way as they are on an annual basis. |
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Term
| How should contingencies be reported in an interim report? |
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Definition
| Disclosed the same way as they are disclosed in annual reports. |
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Term
| According to International Financial Reporting Standards (IFRS), all of the following are part of minimum components of interim financial reports except: |
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Definition
| Accrual of inocome tax expense at the end of the each interim period. |
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Term
| Which of the following is false with regard to accounting standards for segment reporting according to International Financial Reporting Standards (IFRS) and U.S. GAAP? |
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Definition
| IFRS and U.S. GAAP both require disclosure of intangible assets attributable to geographic segmentes. |
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Term
| Which of the following must be disclosed by a geographic segment according to U.S. GAAP? |
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Definition
| Revenues from external customers. |
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Term
| How should a change from one generally accepted accounting principle to another accepted principle be handled in a third-quarter income statement? |
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Definition
| Adjust financial statements for each prior period presented to reflect the effects of the new principle in those reported periods. |
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Term
| All of the following are required to be reported in interim financial statements for a material operating segment except: |
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Definition
*Intersegment revenues
*Reconciliation of segment profit or loss to total income before taxes
*Segment assets
*Segment profit or loss
*Segment revenues from external customers |
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Term
| On January 1, 2011, ABC Corp. acquired some of the outstanding bonds of one of its subsidiaries. The bonds had a carrying value of $421,620, and ABC paid $401,937 for them. How should you account for the difference between the carrying value and the purchase price in the consolidate financial statements for 2011? |
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Definition
| The differenc is treated as a gain from the extinguishment of the debt. |
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Term
| ABC Corp. recently acquired $500,000 of the bonds of XYZ Co., one of its subsidiaries, paying more than the carrying value of the bonds. According to the most practical view of this intra-entity transaction, to whom would the loss be attributed? |
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Definition
| To ABC because ABC is the controlling party in the business combination. |
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Term
| If newly issued debt is issued from a parent to its subsidiary, which of the following statements is false? |
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Definition
| A net gain or loss on the bond transaction will be reported. |
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Term
| Which of the following statements is true concerning the acquisition of existing debt of a consolidated affiliate in the year of the debt acquisition? |
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Definition
| Any gain or loss is recognized on a consolidated income statement. |
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Term
| Which of the following statements is true for a consolidated statement of cash flows? |
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Definition
| All of parent's dividends and noncontrolling interest of subsidiary's dividends are deducted as a financing activity. |
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Term
| Where do dividends paid to the noncontrolling interest of a subsidiary appear on a consolidated statement of cash flows? |
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Definition
| Cash flows from financing activities. |
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Term
| Where do dividends paid by a subsidiary to the parent company appear in a consolidated statement of cash flows? |
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Definition
| They do not appear in the consolidated statement of cash flows. |
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Term
| A variable interest entity can take all of the following forms except a: |
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Definition
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Term
| All of the following are examples of variable interests except |
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Definition
a. Asset purchase options
b. Participation rights
c. Lease residual value guarantees
d. Guarantees of debt
e. Stock options
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Term
| Which of the following is not a potential loss or return of a variable interest entity? |
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Definition
| Entitles holder to receive shares of common stock |
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Term
| Which of the following characteristics is not indicative of an enterprise qualifying as a primary beneficiary with a controlling financial interest in a variable interest entity? |
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Definition
| No ability to make decisions about the entity's activities |
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Term
| Which of the following statements is false concerning variable interest entities (VIEs)? |
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Definition
| A VIE cannot take the legal form of a partnership or corporation |
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Term
| Which of the following statements is true concerning variable interest entities (VIEs)? 1) The role of the VIE equity investors can be fairly minor 2) A VIE may be created specifically to benefit its sponsoring firm with low-cost financing 3) VIE governing agreements often limit activities and decision making 4) VIEs usually have a well-defined and limited business activity |
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Definition
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Term
| Wolff Corporation owns 70 percent of the outstanding stock of Donald, Inc. During the current year, Donald made $75,000 in sales to Wolff. How does this transfer affect the consolidated statement of cash flows? |
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Definition
| Not reported in the consolidated statement of cash flows |
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Term
| ABC, Inc. owns 80 percent of the outstanding stock of XYZ Corporation. During the current year, XYZ made $125,000 in sales to ABC. How does this transfer affect the consolidated statement of cash flows? |
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Definition
| Not reported in the consolidated statement of cash flows |
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Term
| How do intra-entity sales of inventory affect the preparation of a consolidated statement of cash flows? |
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Definition
| Because the consolidated balance sheet and income statement are used in preparing the consolidated statement of cash flows, no special elimination is required |
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Term
| ABC, Inc. owns 70 percent of XYZ, Inc. The consolidated income statement for a year reports $40,000 Noncontrolling Interest in XYZ, Inc. Income. XYZ paid dividends in the amount of $100,000 for the year. What are the effects of these transactions in the consolidated statement of cash flows for the year? |
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Definition
| Decrease in the financing section of $30,000 |
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Term
| Where do intra-entity sales of inventory appear in a consolidated statement of cash flows? |
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Definition
| They do not appear in the consolidated statement of cash flows |
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Term
| Which of the following is not an indicator that requires a sponsoring firm to consolidate a variable interest entity (VIE) with its own financial statements? |
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Definition
| The sponsoring firm receives risks and rewards of the VIE in porportion to equity ownership |
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Term
| On November 8, 2011, ABC Corp. sold to XYZ Co., its wholly owned subsidiary. The land cost $61,500 and was sold to XYZ for $89,000. From the perspective of the combination, when is the gain on the sale of the land realized? |
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Definition
| When XYZ Co. sells the land to a third party |
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Term
| ABC Co. owned all of the voting common stock of XYZ Co. On January 2, 2010, ABC sold equipment to XYZ for $125,000. The equipment had cost ABC $140,000. At the time of the sale, the balance in accumulated depreciation was $40,000. The equipment had a remaining useful life of five years and a $0 salvage value. Straight-line depreciation is used by both ABC and XYZ. At what consolidated balance sheet dated December 31, 2010? |
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Definition
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Term
| During 2010, ABC Co. sold inventory to its wholly-owned subsidiary, XYZ Co. The inventory cost $30,000 and was sold to XYZ for $44,000. From the perspective of the combination, when is the $14,000 gain realized? |
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Definition
| When the goods are sold to a third party by XYZ |
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Term
| ABC Co. owned 70% of the voting common stock of XYZ Co. During 2010, XYZ made frequent sales of inventory to ABC. There were unrealized gains of $40,000 in the begining inventory, and $25,000 at the enf of the year. XYZ reported net income of $137,000 for 2010. ABC decided to use the equity method to account for the investment. What is the noncontrolling interest's interest's share of XYZ's net income for 2010? |
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Definition
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Term
| ABC Co. owned all of the voting common stock of XYZ Corp. The corporations; balance sheets dated Decmeber 31, 2010, included the following balances for land: for ABC--$416,000, and for XYZ--$256,000. On the original date of acquisition, the book value of XYZ's land was equal to its fair value. On April 4, 2011, ABC sold to XYZ a parcel of land with a book valule of $65,000. The selling price was $83,000. There was no other transactions which affected the companies' land accounts during 2010. What is the consolidated balance for land on the 2011 balance sheet? |
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Definition
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Term
| On January 1, 2011, ABC Co sold equipement to its subsidiary, XYZ Corp., for $115,000. The equipment had cost $125,000, and the balance in accumulated depreciation was $45,000. The equipment had an estimated remaining useful life of eight years and $0 salvage value. Both companies use straight-line depreciation. On their seperate 2011 income statements, ABC and XYZ reported depreciation expense of $84,000 and $60,000 respectively. The amount of depreciation expense on the consolidated income statement for 2011 would have been |
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Definition
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Term
| ABC Co. acquired 75 percent of the voting common stock of XYZ Corp. on January 1, 2011. During the year, ABC made sales of inventory to XYZ. The inventory cost ABC $260,000 and was sold to XYZ for $390,000. XYZ still had $60,000 of the goods in its inventory at the end of the year. The amount of unrealized intercompany profit that should be eliminted in the consolidation process at the end of 2011 is |
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Definition
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Term
| ABC Corp. owned 80% of XYZ Corp.'s common stock. During October 2011, XYZ sold merchandise to ABC for $140,000. At December 31, 2011, 50% of this merchandise remained in ABC's inventory. For 2011, gross profit percentages were 30% of sales for ABC and 40% of sales for XYZ. The amount of unrealized intercompany profit in ending inventory at December 31, 2011 that should be eliminted in the consolidation process is |
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Definition
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Term
| ABC Co. holds 90% of the common stocl of XYZ Co. During 2011, ABC reported sales of $1,120,000 and cost of goods sold of $840,000. For this same period, XYZ had sales of $420,000 and cost of goods sold of $252,000. Included in the amounts for ABC's sales were ABC's sales of merchandise to XYZ for $140,000. There were no sales from XYZ to ABC. Intra-entity sales had the same markup as sales to outsiders. XYZ still had 40% of the intra-entity sales as inventory at the end of 2011. What are consolidated sales and cost of goods sold for 2011? |
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Definition
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Term
| ABC Corp. owned 70% of the outstanding common stock of XYZ Inc. On January 1, 2009, ABC acquired a building with a ten-year life for $420,000. No salvage value was anticipated and the building was to be depreciated on the straight-line basis. On January 1, 2011, ABC sold this building to XYZ for $392,000. At that time, the building had a remaining life of eight years but still no expected salvage value. In preparing financial statements for 2011, how does this transfer affect the calculation of ABC's share of consolidated net income? |
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Definition
| Consolidated net income must be reduced by $49,000 |
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Term
| ABC Co acquired 60% of XYZ Co. on January 1, 2011. During 2011, ABC made several sales of inventory to XYZ. The cost and selling price of the goods were $140,000 and $200,000, respectively. XYZ still owned one-fourth of the goods at the end of 2011. Consolidated cost of goods sold for 2011 was $2,140,000 because of a consolidating adjustment for intra-entity sales less the entire profit remaining in XYZ's ending inventory. How would noncontrolling interest in net income have differed if the transfers had been for the same amount and cost, but from XYZ to ABC? |
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Definition
| Noncontrolling interest in net income would have decreased by $6,000 |
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