Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Question
Chapter 4, Problem 4.3C
(a)
To determine
Introduction: Consolidated
To define: The effect of negative retained earnings of Company S in the consolidated balance sheet immediately after acquisition.
(b)
To determine
Introduction: Consolidated balance sheet represents the combined financial position of the parent company along with its subsidiaries.
To define:The impact of negative retained earnings on consolidated worksheet entries.
(c)
To determine
Introduction: Consolidated balance sheet represents the combined financial position of the parent company along with its subsidiaries.
To define:If
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Students have asked these similar questions
On January 1, Year 5, Pic Company acquired 7,500 ordinary shares of Sic Company for $708,000. On January 1, Year 6, Pic Company
acquired an additional 2,000 ordinary shares of Sic Company for $212,000. On January 1, Year 5, the shareholders' equity of Sic was
as follows:
Ordinary shares (10,000 no par value shares issued)
Retained earnings
$200,000
303,000
$503,000
The following are the statements of retained earnings for the two companies for Years 5 and 6:
Pic
Year 5
Year 5
Retained earnings, beginning of year
Profit
Dividends
Retained earnings, end of year
$ 506,000
165,000
(100,000)
$ 571,000
Year 6
$ 571,000
160,500
(120,000)
$ 611,500
$ 303,000
118,500
(90,000)
$ 331,500
Sic
Year 6
$ 331,500
156,500
(90,000)
$ 398,000
Tanton plc is the parent company of Ruckus plc. Tanton sold its inventory to Ruckus for a price of Ā£14,000. Tanton had held such inventory on its statement of financial position at a cost of Ā£10,000. By the end of the financial year, Ruckus still held Ā£2,800 of that inventory on its statement of financial position.
How much unrealised profit should be cancelled on consolidation?
Ā
a.
Zero
b.
Ā£400
c.
Ā£800
d.
Ā£2,800
e.
Ā£4,000
50.
Analyze the following:
I ā When a component of an entity was discontinued during the year, the component's operating loss of the current period should be included in income statement as part of revenue and expenses.
II ā If the fair value less cost of disposal is lower than the carrying amount of a non-current asset classified as held for sale, the difference is accounted for as an impairment loss.
III ā The effect of recording a 100% share dividend would be to leave working capital unaffected, decrease earnings per share and increase book value per share.
Given these, we can conclude that:
Group of answer choices
Only statement II is false.
Only statements I and III are true.
Only statements I and II are true.
Statement III is false.
Chapter 4 Solutions
Advanced Financial Accounting
Ch. 4 - When is the carrying value of the investment...Ch. 4 - What is a differential? How is a differential...Ch. 4 - Prob. 4.3QCh. 4 - Prob. 4.4QCh. 4 - Prob. 4.5QCh. 4 - Prob. 4.6QCh. 4 - Prob. 4.7QCh. 4 - Prob. 4.8QCh. 4 - Prob. 4.9QCh. 4 - Prob. 4.10Q
Ch. 4 - Prob. 4.11QCh. 4 - What determines whether the balance assigned to...Ch. 4 - What does the termpushdown accountingmean?Ch. 4 - Under what conditions is push-down accounting...Ch. 4 - Prob. 4.15QCh. 4 - Prob. 4.2CCh. 4 - Prob. 4.3CCh. 4 - Prob. 4.4CCh. 4 - Prob. 4.1ECh. 4 - Prob. 4.2ECh. 4 - Prob. 4.3ECh. 4 - Prob. 4.4ECh. 4 - Prob. 4.5ECh. 4 - Prob. 4.6ECh. 4 - Prob. 4.7ECh. 4 - Prob. 4.8ECh. 4 - Prob. 4.9ECh. 4 - Prob. 4.10.1ECh. 4 - Prob. 4.10.2ECh. 4 - Prob. 4.10.3ECh. 4 - Prob. 4.10.4ECh. 4 - Prob. 4.10.5ECh. 4 - Prob. 4.11.1ECh. 4 - Prob. 4.11.2ECh. 4 - Prob. 4.11.3ECh. 4 - Prob. 4.11.4ECh. 4 - Prob. 4.12ECh. 4 - Prob. 4.13ECh. 4 - Prob. 4.14ECh. 4 - Prob. 4.15ECh. 4 - Prob. 4.16ECh. 4 - Prob. 4.17ECh. 4 - Prob. 4.18.1ECh. 4 - Prob. 4.18.2ECh. 4 - Prob. 4.18.3ECh. 4 - Prob. 4.18.4ECh. 4 - Prob. 4.18.5ECh. 4 - Prob. 4.18.6ECh. 4 - Prob. 4.19ECh. 4 - Prob. 4.20ECh. 4 - Prob. 4.21ECh. 4 - Prob. 4.22ECh. 4 - Prob. 4.23ECh. 4 - Prob. 4.24AECh. 4 - Prob. 4.25PCh. 4 - Prob. 4.26PCh. 4 - Prob. 4.27PCh. 4 - Consolidated Balance Sheet Powder Company spent...Ch. 4 - Prob. 4.29PCh. 4 - Prob. 4.30PCh. 4 - Prob. 4.31PCh. 4 - Prob. 4.32PCh. 4 - Prob. 4.33PCh. 4 - Prob. 4.34PCh. 4 - Prob. 4.35PCh. 4 - Prob. 4.36PCh. 4 - Prob. 4.37AP
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- Quasi-reorganization effected thru recapitalization includes, except Ā A. creating enough share premium to absorb the deficit in the corporation B. creating enough revaluation surplus that can absorb the deficit thru revaluation of property, plant and equipmentĀ C. results to a zero balance in the retained earnings account after recapitalization. D. decreasing the par value of the shares which results to the increase the balance of the share premium account.arrow_forwardStatement I: Gain on bargain purchase is included in the consolidated balance of shareholdersā equity at the date of acquisition.Statement II: For business combination for SMEs, all business combination expenses, direct, indirect, and share-issue costs are deducted in the consolidated balance of shareholdersā equity at the date of acquisition. a. False, True b. False, False c. True, True d.True, Falsearrow_forwardOn January 1, Year 5, Pic Company acquired 7,500 ordinary shares of Sic Company for $726,000. On January 1, Year 6, Pic Company acquired an additional 2,000 ordinary shares of Sic Company for $260,000. On January 1, Year 5, the shareholders' equity of Sic was as follows: Ordinary shares (10,000 no par value shares issued) Retained earnings $200,000 324,000 pok $524,000 Int ences The following are the statements of retained earnings for the two companies for Years 5 and 6: Pic Sic Year 5 Year 6 Year 5 Year 6 Retained earnings, beginning of year $ 548,000 178,000 (100,000) $ 626,000 $ 626,000 159,000 (120,000) $ 665,000 $ 324,000 $ 380,500 159,500 Profit 146,500 (90,000) $ 380,500 Dividends (90,000) $ 450,000 Retained earnings, end of year Additional Information ā¢ Pic uses the cost method to account for its investment in Sic. Any acquisition differential is allocated to customer contracts, which are expected to provide future benefits until December 31, Year 7. Neither company has anyā¦arrow_forward
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