Flashcards in Mod 18 Wrong Answers Deck (14):
If a subsidiary has ending inventory on hand of $20,000 that was acquired from the parent and a gross profit ratio of 10%, what is the worksheet consolidation adjustment entry to eliminate the profit in ending inventory for the intercompany transaction?
Cost of sales. 2,000
Ending inventory. 2,000
If a parent company issued $200,000 Bonds Payable at a $10,000 premium. What is the worksheet adjustment entry for consolidation assuming the subsidiary had purchased 50% of the bonds for $125,000?
Bonds Payable. 100,000
Premium on bonds payable. 5,000
Loss on extinguishment of bonds 20,000
Investment in bonds. 125,000
What is the account that allocates excess fair value over book value, before it is closed to good will?
When the noncontrolling interest = $10,000 and the cost of the investment is $30,000 , what is the fair value of net assets
FV of Net assets = noncontrolling interest + cost of investment
When the equity earnings of the investee appears in the income statement for the year ended...
It has already been included in the year ended retained earnings
If the parent "uses the equity method to account for the investment in sub" then...
Net income from the sub is already included in the parent's
Sales to sub - COGS to sub =?
Ending inventory (intercompany)
If a parent sells equipment to its sub, the depreciation expense on consolidated statements for the year should be...
Equal to depreciation as if parent never sold the equipment
What is the eliminating journal entry for an intercompany sale of equipment, where the parent booked a gain?
Gain on equip. Xxx
Acc. Depreciation. Xxx
Acc. Depreciation. Xxx
Depreciation exp. Xxx
In an elimination entry of gain on equipment, what accounts are restored?
2) how are they recorded?
Accumulated depreciation and equipment
2) as if sale was never made
When a company holds merchandise from the parent with a $30,000 profit when it sold sold $60,000 worth of merchandise, what is the unrealized profit, when half of the inventory is still unsold?
When a company holds merchandise from the parent with a $30,000 profit when it sold sold $60,000 worth of merchandise, what is the eliminating journal entry to adjust for consolidation (no numbers needed) when half of the inventory is still unsold?
Ending inventory. Xxx
On December 31, yr. 2, the parent paid $91,000 to purchase $100,000 of the bonds outstanding issued by its sub. These bonds were originally issued at par. What is the eliminating entry for consolidation?
Bonds payable. Xxx
Discount on bonds payable Xxx
Gain on retirement of bonds. Xxx
Investment in bonds. Xxx