F4/M6 Intercompany Transactions

Question 1

(T/F): When consolidating, even if there is NCI, eliminate 100% of intercompany transactions

Answer 1

True

Question 2

(T/F): Adjusting JE’s require you to eliminate profit in ending inventory and reduce COGS for the % of profit still in ending inventory

Answer 2

True

Question 3

(T/F): If the sub acquires the parents bond from an outsider, the bond is considered to be retired and a G/L is recognized on the Consolidated I/S

Answer 3

True

Question 4

(T/F): Retained earnings is Debited and Land is credited for every year after the intercompany transaction until the land is sold to a third party

Answer 4

True

Question 5

Necessary JE to adjust intercompany sale of machinery and adjust depreciation expense

Answer 5

Eliminate gain on intercompany sale
Restore asset to original value before sale
Reinstate accumulated depreciation amount before sale

Question 6

In the consolidated financial statements of a parents and its subsidiaries, what amount of dividends should be reported in the consolidated financial statements?

Answer 6

Only the dividends paid to NCI

Question 7

(T/F):On the Consolidated Balance Sheet, only report Parents Equity and the portion of NCI

Answer 7

True