olidation accounting *** O A. reports th
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K Consolidation accounting ***
O A. reports the receivables and payables of the parent company only.
OB. eliminates all liabilities.
C. combines the accounts of the parent company and those of its subsidiary companies.
D. all of the above.
Step by step
Solved in 3 steps
- Which of the following items shall be cancelled on consolidation? a. Receivables related to intra-group sales b. Payables related to intra-group purchases c. Unrealised profit on intra-group transactions d. Loans related to intra-group lending e. All of the aboveHow is the amount assigned to the non-controlling interest normally determined when a consolidated balance sheet is prepared immediately after a business combination?Following the completion of a business combination in the form of a statutory consolidation, what is the balance in the new corporation’s Retained earnings account? A. The sum of the acquirer and acquiree retained earnings account balances. B. The acquirer retained earnings account balance C. Zero D. The acquiree retained earnings account balance
- 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.4. What method normally is used to account for the ownership of a subsidiary on the parent’s financial records? a Cost model/methodb. Equity methodc. Consolidationd. Either cost model/method or equity methodS1: 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. S2: 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 S2 is correct B. Both statements are incorrect C. Only S1 is correct D. Both statements are correct
- Consolidation financial statements are prepared when a parent-subsidiary relationship exists in recognition of the accounting principle concept of: a. Reliability b. Entity c. Materiality d. Going ConcernThe entry to cancel the effects of the intercompany transactions in preparation of theConsolidated FinancialStatements are made on: A.the books of the subsidiaryB.The books of the parent if downstream sale, and the books of the subsidiary if upstream saleC.the books of the parentD.the working paperWhich of the following statements is incorrect concerning the preparation of consolidated financial statements? * A. Consolidated financial statem ents shall be prepared using uniform accounting policies for like transactions and other events in similar circumstances. b. The financial statements of the parent and its subsidiaries shall be consolidated on a line by line basis by adding together like items of assets, liabilities, equity, income and expenses. c. Intragroup balances, transactions, income and expenses shall be eliminated in full. d. When the reporting dates of the parent and a subsidiary are different, the difference shall be no more than six months.
- When does a company record the transfer of accounts receivable as a sale? As a secured borrowing (a liability)?What is push-down accounting?a. A requirement that a subsidiary must use the same accounting principles as a parent company.b. Inventory transfers made from a parent company to a subsidiary.c. A subsidiary’s recording of the fair-value allocations as well as subsequent amortization.d. The adjustments required for consolidation when a parent has applied the equity method of accounting for internal reporting purposes.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
