under unrealized gross profit equity method:
1)Investor-investee relationship is that the inter company seller of goods retains partial interest in inventory until buyer will sell off the inventory to third party
2) In sales of inventory between investor and investee , gross profit will be shown unrealized in books until buyer sells or consume the inventory purchased.
3) This rule will apply to downstream and upstream transfers
4)when investor sells items to investee, it is downstream transfer
5)When investee sells item to investor, it is upstream transfer
so answer is False)
An downstream sale of inventory is a sale made by investor to investee
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QUESTION 2 An downstream sale of inventory is a sale made by the investee to the...
QUESTION 26 The same adjustments are made for upstream and downstream sales concerning unrecognized profits in intra-entity inventory sales when an investor uses the equity method. True False.
An upstream sale of inventory is a sale: Multiple Choice between subsidiaries owned by a common parent made by the investee to the investor made by the investor to the investee. with the transfer of goods scheduled by contract to occur on a specified future date
Equity method journal entries with intercompany sales of inventory An investor owns 25% of an investee, and accounts for its investment using the equity method. At the beginning of the year, the Equity Investment was reported on the investor's balance sheet at $2,000,000. During the year, the investee reported net income of $800,000 and paid dividends of s200,000. In addition, the investor sold inventory to the investee, realizing a gross profit of $240,000 on the sale. At the end of...
An investor owns 25% of an investee, and accounts for its investments using the equity method. At the beginning of the year, the equity investment was reported on the investors balance sheet at $1,000,000. During the year the investee reported net income of $400,000 and paid dividends of $100,000. In addition the investor sold inventory to the investee realizing gross profit of $120,000 on the sale. At the end of the year 30% of the inventory remained unsold by the...
An investor owns 25% of an investee, and accounts for its investment using the equity method. At the beginning of the year, the Equity Investment was reported on the investor's balance sheet at $1,500,000. During the year, the investee reported net income of $600,000 and paid dividends of $150,000. In addition, the investor sold inventory to the investee, realizing a gross profit of $180,000 on the sale. At the end of the year, 30% of the inventory remained unsold by...
Question 5 (2 points) The larger the demand variability the smaller the lead time. True False Question 6 (2 points) A perpetual inventory system is a physical count of items made at periodic intervals True False Question 7 (2 points) Unions generally approve of part-time workers True False Part-time workers get similar fringe benefits to full-time workers True False Question 9 (2 points) Layoffs cost significant amounts of money True False Question 10 (2 points) Overtime/slack time is less severe...
Question 4 (25 points) On January 1, 2018, Investor Company purchased Investee Company bonds with a face value of $660,000. Investor Company paid $628,295.58 in cash for the investment. Investor Company treated the investment as Available-For-Sale. The bonds mature on December 31, 2020. The bonds pay 10% interest each December 31. At the time of the purchase, the market rate for bonds of identical risk and maturity was 12% Investor Company prepared the following amortization table for the bonds. Date...
On January 1, Year 1. Investor, Inc. acquired 40% of the outstanding common stock of Investee Co, for $530,000. Investee's net assets on that date totaled $1.2 million. Any excess of cost over book value is attributable to a trade name with a 20-year remaining life. Investee immediately began supplying inventory to Investor as follows: Year Year Year 2 Transfer Price $100,000 $150,000 Cost to Investec $70,000 $96,000 Amount Held by Investor at Year-End (at Transfer Price) $25,000 $45,000 Inventory...
QUESTION 16 In a situation where the investor does not exercises significant influence over the investee, which of the following entries is not actually posted to the books of the investor? (1) Debit to the investment account, and a Credit to the Equity in investee Income account Debit to Cash for dividends received from the investeel and a Credit to Investment income account Lilly Debit to Cash for dividends received from the investeel and a Credit to the Dividend Receivable...
question 2
Question 5
2-On Jan 2, 2020, Parent sells to its wholly owned investee equipment that had cost $250,000. The selling price was $180,000 and accumulated depreciation on that date was $75,000. The subsidiary depreciates the equipment over its remaining life of 10 years. Required: a. Compute the difference between the annual depreciation expense when Parent owned the equipment and depreciation expense recorded by the subsidiary. b. Compute the gain on sale recorded by the parent. c. Prepare the...