Describe the consolidation procedure that will be applied to account for the sale of an asset between the parent and subsidiary in the consolidated financial statements. Discuss the effect of a profit and loss on sale on: (i) The consolidated statement of financial position (ii) The consolidated statement of profit or loss and other comprehensive

Describe the consolidation procedure that will be applied to account for the sale of an asset between the parent and subsidiary in the consolidated financial statements. Discuss the effect of a profit and loss on sale on: (i) The consolidated statement of financial position (ii) The consolidated statement of profit or loss and other comprehensive

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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How is the goodwill appearing on the statement of the financial position for a subsidiary prior to a business combination treated in the subsequent preparation of consolidated statements?
for the following intercompany transaction state the principle to be used in accounting for intercompany gains on current and future consolidated income statements: Gains on the sale of depreciable fixed assets
Identify appropriate placements for the components of the non controlling interest in consolidated financial statements.
What amount will be shown on the July 1, 20X1, consolidated balance sheet for the following: Total equity Now assume this transaction had been completed prior to the elimination of poolings of interest, and that the pooling method had been used to record the acquisition. Redo requirements 1 and 2: Total assets Total liabilities Total equity
Which consolidation method should be used in preparing consolidated financial statements in accordance with IFRS? A. Proportionate consolidation method.B. Either identifiable net assets or fair value enterprise method.C. New entity method.D. Parent company method.
when preparing the consolidated financial statements, which of the following should be deducted from the group reserves? a. share in associate profit b. value of the loan from subsidary to associate c. group's share of sub-subsidary profit d. value of goodwill impairment expense
A partially owned subsidiary sold a non-depreciable assets to its parent at a loss. In the year subsequent to the year of intercompany sale of non-depreciable assets, the working paper consolidation entry under cost method will debit: I. Non-depreciable assets Ill. NCI I. Investment in subsidiary IV. Retained Earnings a. I, III and IV b. I c. III and IV d. I, II, and IV
Statement 1: The preparation of consolidated financial statements after acquisition is materially different concept from preparing them in the acquisition date in the sense that reciprocal accounts are eliminated and remaining balances are combined. Statement 2: All revenues and expenses of individual consolidating companies arising from transactions and actions with affiliated companies are included in the consolidated financial statements. a. Only Statement 1 is correct b. Both statements are correct c. Only Statement 2 is correct d. Both statements are incorrect
The consolidated balance of fixed assets will be affected by working paper entries involving all of the following, except: A. Excess of fixed asset FV over BV of the parent at the date of acquisition B. Amortization of the excess of fixed asset FV over BV of the subsidiary at the date of acquisition C. Realized gain or loss on intercompany sale of fixed asset D. Unrealized gain or loss on intercompany sale of fixed asset
Do you think the FASB made the correct decision in requiring consolidated financial statements to recognize all subsidiary's assets and liabilities at fair value regardless of the percentage ownership acquired by the parent?
Explain the purpose of the pre-acquisition entries in the preparation of consolidated financial statements.
At acquisition date the net assests of the acquired subsidairy are included in the consolidated financial statement at their acquisition date fair value. However most of the parent assets and liabilities are measured on an historical cost basis . Is this Consistent ? Explain.