A subsidiary that is 75% owned by its parent company pays a dividend of R100 000. On consolidation the amount to be eliminated
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A subsidiary that is 75% owned by its parent company pays a dividend of R100 000. On consolidation the amount to be eliminated
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- A parent company owns 80% of the issued capital of its subsidiary. On consolidation, a sale of inventories between parent and subsidiary will be eliminated as follows Select one: A. 20% of the sale amount B. 80% of the sale amount C. 100% of the sale amount D. not eliminatedA subsidiary that is 75% owned by its parent company pays a dividend of R100 00. Onconsolidation the amount to be eliminated: Select one: A. none of the above B. R100 000C. R25 000 D. 75 000Which item is eliminated when preparing a consolidation worksheet? a. Equipment acquisitions Macca Ltd has a wholly (100%) owned subsidiary, Walnut Ltd. Walnut Ltd has a subsidiary, Cashew Ltd and owns 75% of the subsidiary’s shares. If Cashew Ltd went into liquidation, Macca Ltd would be entitled to: a. 75% of any surplus of Cashew Ltd’s assets over its liabilities. b. 100% of profits made by Cashew Ltd since Macca Ltd acquires Walnut Ltd. c. 75% of profits made by Cashew Ltd since its acquisition by Walnut Ltd. d. whichever of the above that gives Macca Ltd the highest entitlement. b. Intragroup dividends c. Goodwill d. Retained earning
- What is the goodwill arising from the consolidation, if the 100,000, P50 par value shares of the subsidiary are currently selling at 90/share?A parent acquires the outstanding bonds of a subsidiary company directly from an outside third party. For consolidation purposes, this transaction creates a gain of $45,000. Should this gain be allocated to the parent or the subsidiary? Why?A wholly owned subsidiary declared dividend and half remains unpaid bythe end of the year, which of the following is TRUE? a. Only half of the amount of the dividend will be used to reduce the profit ofthe parent for consolidation purposes. b. The total amount of the dividend will be eliminated in the working paperelimination entry by debiting “dividend revenue” account.c. The transaction will have an impact in the computation of the balance ofNCI at the end.d. The elimination entry will include a debit to non-controlling interest for theamount of dividend received by the non-controlling shareholders.
- A partially owned subsidiary declared dividend and half remains unpaid by the end of the year, which of the following is CORRECT? A. The total amount of the dividend will be eliminated in the working paper elimination entry by debiting “dividend” account. B. Half of the amount of the dividend will be used to reduce the profit of the parent for consolidation purposes. C. The elimination entry will include a debit to non-controlling interest for the amount of dividend received by the non-controlling shareholders. D. The transaction will increase the balance of NCI at the end.When a company owns 50% or more of another company, accounting standards require that the owner (parent) consolidates its financial statements with the subsidiary. Explain the rationale and the reasons behind that requirementQuestion: A Company own 90% of the outstanding shares of B Company and 80% of the outstanding shares of C Company. The companies sell goods to each other. For the current year, A sold goods to C for P250,000 at a 40% mark-up. C sold 70% of the goods to B for P250,000. B in turn sold 65% of the goods to outside parties for P300,000. 1 . Compute for the consolidated cost of sales. a) 274,120 b) 50,120 c) 59,528 d) 283,528 2 . Compute the consolidated gross profit. a) 149,880 b) 240,472 c) 249,880 d) 140,472
- Parent Company acquired 80% of the ordinary shares of Subsidiary Company at a time when Subsidiary’s book values and fair values were equal. Selected financial data are available for 2022 (see image below).Intercompany sales are as follows (see image below).How much is the Consolidated Net Income? please explain.Companies X, Y and Z, parties to a consolidation, have the following data: X Co Y Co Z CoNet assets P400,000 P600,000 P1,000,000Average annual earnings 60,000 60,000 80,000The parties collectively agreed that the new corporation, AA Co will issue a single class of stock based on the earnings ratio. What is the stock distribution ratio to companies X, Y and Z, respectively?1. Parent Company purchased 90% of the outstanding shares of Subsidiary Company paying P975,000. At this time, Subsidiary’s Net assets had a fair value of P1,050,000 however, the 10% minority interest are currently being traded in the stock market at a total price of P110,000. The non-controlling interest is to be stated at fair value. What is the goodwill to be reported as a result of the business combination? 2. Parent Company acquires 75% of Subsidiary Company’s ordinary shares for P225,000 cash. At that date, the shares of Subsidiary are currently selling at P41/share. Subsidiary has a total of 8,000 shares outstanding. Also on that date, Subsidiary reports identifiable assets with a book value of P400,000 and a fair value of P510,000, and it has liabilities with a book value and fair value of P190,000.10. What is the goodwill or (income) from acquisition arising from the consolidation if the non-controlling interest is to be stated at fair value?