Answer is option B
b. If the parent company applies the initial value method on its own books, then entry *C would reduce the parent's beginning retained earnings
Entry *C is used to bring the parent's figures like beginning retained earnings and investment account up-to-date as of the first day of the current year. In case of equity method, entry *C is not required. As in that method beginning balance of retained earnings and investment are correctly stated and no adjustment is required for them. in case of initial value method, neither changes related to subsidiary’s book nor changes excess amortizations relating to the acquisition price by the parent is recognized. In case of partial equity method changes related to subsidiary’s book are recorded.
In a consolidated worksheet, we sometimes need to adjust the beginning balance of the parent company's...
Below is the equity section of the consolidated worksheet between a parent and its subsidiary Subsidiary Parent Accounts Payable 1,083 890 Long-term Debt 2,013 1,262 Common Stock 3,356 1,759 Retained Earnings 5,467 4,677 Here is the separate income and dividends paid during the year Separate Net Income Dividends Declared Parent 9,434 2,201 Subsidiary 2,520 850 After the consolidation entry is prepared the consolidated net income will be $
Below is the equity section of the consolidated worksheet between a parent...
Below is the equity section of the consolidated worksheet between a parent and its subsidiary Parent Subsidiary Accounts Payable 1,584 668 Long-term Debt 3,264 1,314 Common Stock 4,285 1,695 Retained Earnings 6,621 4,619 Here is the separate income and dividends paid during the year Separate Net Income Dividends Declared Parent 7,836 2,467 Subsidiary 2,118 881 When the consolidation entry is prepared the debit to Retained Earnings will be $____
A parent owns 80% of its subsidiary. At the beginning of the current year, the parent sells equipment carried on its books at $40,000 to its subsidiary for $50,000. The equipment has a 2-year remaining life, straight-line. What is the effect of the above on equity in net income for the current year, reported on the parent's books, assuming the parent uses the complete equity method? A. $8,000 decrease B. $5,000 decrease C. No effect D. $4,000 decrease
17. A parent company consolidates its 80%-owned subsidiary. It is now December 31, 2021. The following information is available: • The subsidiary's reported net income for 2021 is $30,000. • The subsidiary sells merchandise to the parent at a markup of 15% on cost. The parent's 2021 ending inventory balance contains $1,725 in merchandise purchased from the subsidiary. The parent's 2021 beginning inventory contains $2,300 in merchandise purchased from the subsidiary. Total sales price of merchandise transferred between the subsidiary...
looking for help on question 2 a-h.
Questions 1. CCES Corporation acquires a controlling interest in Schmaling, Inc. CCES may utilize any one of three methods to internally account for this investment. Deseribe ench of these methods, and indicate their advantages and disadvantages. 2. Maguire Company obtains 100 percent control over Williams Company. Several years after the takeover, consolidated financial statements are being produced. For each of the following accounts, briefly describe the values that should be included in consolidated...
33. On consolidated working papers, a subsidiary's net income is A) deducted from beginning consolidated retained earnings. B) deducted from ending consolidated retained earnings. C) allocated between the noncontrolling interest share and the parent's share. D) only an entry in the parent company's general ledger.
10% Ownership 3. Under which method of accounting used by the parent prior to consolidation will the parent's net income equal the consolidated net income? a. Equity Method b. Partial Equity Method c. Initial Value Method d. Fair Value Method 4. Under the equity method, the investor should account for Income from Discontinued Operations from the investees with: a. A footnote disclosure only b. The ordinary income from the investee c. With its Income from discontinued operations d. An adjustment...
Determining ending consolidated balances in the second
year following the acquisition—Equity
method
Assume a parent company acquired a subsidiary on January 1,
2015. The purchase price was $745,000
in excess of the subsidiary’s book value of Stockholders’ Equity
on the acquisition date, and that excess
was assigned to the following [A] assets:
37. Determining euding consolidated balances in the second year following the acquisition-Equity method Assume a parent company acquired a subsidiary on January 1, 2015. The purchase price was...
Determining ending balances of accounts on the consolidated balance sheet Assume that the parent company acquires its subsidiary by exchanging 55,000 shares of its Common Stock, with a market value on the acquisition date of $40 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary's assets and liabilities at an amount equaling their book values except for a building that it feels is...
Determining ending balances of accounts on the consolidated balance sheet Assume that the parent company acquires its subsidiary by exchanging 82,500 shares of its Common Stock, with a market value on the acquisition date of $40 per share, for all of the outstanding voting shares of the investee. In its analysis of the investee company, the parent values all of the subsidiary's assets and liabilities at an amount equaling their book values except for a building that it feels is...