Term
| 2. When comparing the difference between an upstream and downstream transfer of inventory, and using the initial value method, which of the following statements is true when there is a non-controlling interest? |
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Definition
| Income from subsidiary will be higher by the amount of the beginning inventory profits multiplied by the non-controlling interest percentage for upstream transfers. |
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Term
| 3. An intra-entity sale took place whereby the transfer price was less than the book value of a depreciable asset. Which statement is true for the year following the sale? |
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Definition
| A worksheet entry is made with a credit to investment in subsidiary for a downstream transfer when the parent uses the equity method. |
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Term
9. Walsh Company sells inventory to its subsidiary, Fisher Company, at a profit during 2010. One-third of the inventory is sold by Walsh uses the equity method to account for its investment in Fisher.
In the consolidation worksheet for 2011,
Which of the following choices would be a debit entry to eliminate unrealized intra-entity gross profit with regard to the 2010 intra-entity sales? |
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Definition
| Investment in Fisher Company. |
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Term
10. Strickland Company sells inventory to its parent, Carter Company, at a profit during 2010. One-third of the inventory is sold by Carter in 2010.
In the consolidation worksheet for 2011, assuming Carter uses the initial value method of accounting for its investment in Strickland, which of the following choices would be a debit entry to eliminate unrealized intra-entity gross profit with regard to the 2010 intra-entity sales? |
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Definition
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Term
| 1. Justings Co. owned 80% of Evana Corp. During 2011, Justings sold to Evana land with a book value of $48,000. The selling price was $70,000. In its accounting records, Justings should |
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Definition
| recognize a gain of $22,000. |
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Term
| 17. Parent sold land to its subsidiary for a gain in 2008. The subsidiary sold the land externally for a gain in 2011. Which of the following statements is true? |
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Definition
| A gain will be reported in the consolidated income statement in 2011. |
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Term
| Which of the following statements is true regarding inventory transfers between a parent and its subsidiary, using the initial value method? |
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Definition
| Profits on upstream transfers associated with the parent's ending inventory are subtracted from subsidiary net income for the current year in the calculation of parent's income from subsidiary. These year-end deferrals are then added to next year's subsidiary net income in the calculation of parent's income from subsidiary. This procedure is appropriate even if all the intra-entity transactions unsold at year-end may not be sold in the next year. |
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