Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260008722
Author: Hoyle
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 23P
a.
To determine
Describe the difference between upstream transfers and downstream transfers.
b.
To determine
Explain the direction of an intra-entity transfer (upstream versus downstream) affect the application of the equity method.
c.
To determine
Explain the way in which intra-entity gross profit deferral computed in applying the equity method.
d.
To determine
Compute the amount of equity income to be recognized in 2017. Explain the entry which is made to record this income.
e.
To determine
Compute the amount of equity income to be recognized in 2018.
f.
To determine
Explain the way in which these transfers have affected the application of the equity method.
g.
To determine
Explain the way in which these intra-entity transfers affect Sunrise’s financial reporting.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
On January 1, 2012, Aspen Company acquired 80 percent of Birch Company's outstanding voting stock
for $438,000. Birch reported a $457,500 book value and the fair value of the noncontrolling interest was
$109,500 on that date. Also, on January 1, 2013, Birch acquired 80 percent of Cedar Company for
$200,000 when Cedar had a $205,000 book value and the 20 percent noncontrolling interest was
valued at $50,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value
was assigned to a trade name with a 30-year life.
These companies report the following financial information. Investment income figures are not
included.
Sales:
Aspen Company
Birch Company
Cedar Company
Expenses:
Aspen Company
Birch Company
Cedar Company
Dividends declared:
Aspen Company
Birch Company
Cedar Company
2012
$ 632,500
261,250
Not available
$ 542,500
200,000
Not available
$15,000
8,000
Not available
2013
2014
$747,500
327,250
$822,500
416,900
185,900 292,600
$522,500 $750,000
261,000…
It is a receivable financing activity where the Entire Receivable's ownership is sold to the Factee
-Discounting
-Pledging
-Factoring
-Assigning
PAS 2 Inventories requires that lower of cost and net realizable value shall be applied
-On the basis of industry segment.
-On an item-by-item basis.
-To total inventories as a whole.
-To each class of inventory.
A newly admitted general partner is liable to creditors existing at the time of his admission and his liability is
-Loss before delivery of a specific thing which a partner had promised to contribute to the partnership.
-Loss before delivery of a specific thing where the partner promised to contribute only its use and enjoyment, reserving the ownership thereof.
-Loss after delivery of a specific thing where the partner contributed only its use and enjoyment, where such partner reserved the ownership thereof.
-Loss of a specific thing after its delivery to and acquisition of its ownership by…
Under PFRS 3, when is a gain recognized in consolidating financial information?
Group of answer choices
a.When the amount of a bargain purchase exceeds the value of the applicable liability held by the acquired company.
b.In an acquisition when the value of all assets and liabilities cannot be determined.
c.When any bargain purchased is created
d.In a combination created in the middle of the fiscal year
Chapter 1 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
Ch. 1 - A company acquires a rather large investment in...Ch. 1 - What accounting treatments are appropriate for...Ch. 1 - Prob. 3QCh. 1 - Why does the equity method record dividends from...Ch. 1 - Prob. 5QCh. 1 - Smith. Inc., has maintained an ownership interest...Ch. 1 - Prob. 7QCh. 1 - Because of the acquisition of additional investee...Ch. 1 - Prob. 9QCh. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - In a stock acquisition accounted for by the equity...Ch. 1 - Prob. 13QCh. 1 - What is the difference between downstream and...Ch. 1 - Prob. 15QCh. 1 - Prob. 16QCh. 1 - What is the fair-value option for reporting equity...Ch. 1 - When an investor uses the equity method to account...Ch. 1 - Which of the following does not indicate an...Ch. 1 - Prob. 3PCh. 1 - Under fair-value accounting for an equity...Ch. 1 - When an equity method investment account is...Ch. 1 - Prob. 6PCh. 1 - In January 2017, Domingo, Inc., acquired 20...Ch. 1 - Prob. 8PCh. 1 - Evan Company reports net income of 140,000 each...Ch. 1 - Perez, Inc., applies the equity method for its 25...Ch. 1 - Prob. 11PCh. 1 - Alex, Inc., buys 40 percent of Steinbart Company...Ch. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Prob. 15PCh. 1 - On January 1, 2017, Alison, Inc., paid 60,000 for...Ch. 1 - Prob. 17PCh. 1 - Prob. 18PCh. 1 - Prob. 19PCh. 1 - Prob. 20PCh. 1 - Prob. 21PCh. 1 - Echo, Inc., purchased 10 percent of ProForm...Ch. 1 - Prob. 23PCh. 1 - Prob. 24PCh. 1 - Prob. 25PCh. 1 - Prob. 26PCh. 1 - Belden, Inc. acquires 30 percent of the...Ch. 1 - Prob. 28PCh. 1 - Prob. 29PCh. 1 - On July 1, 2016, Killearn Company acquired 88,000...Ch. 1 - Prob. 31PCh. 1 - On January 1, 2017, Stream Company acquired 30...Ch. 1 - EXCEL CASE 1 On January 1, 2018, Acme Co. is...Ch. 1 - Access The Coca-Cola Companys SEC 10-K filing at...Ch. 1 - Prob. 4DYSCh. 1 - Prob. 5DYS
Knowledge Booster
Similar questions
- Hobbes Corporation’s purchase of stock of Tiger Company gave Hobbes voting control over Tiger. A portion of the amount Hobbes paid reflects the fact that Tiger's inventories have a market value in excess of their book value.How should this portion of the cost be accounted for by Hobbes Corporation? Select one: a. Reported as goodwill on the balance sheet of Hobbes Corporation b. Amortized against investment revenue over the remaining useful life of the investment c. Included in the carrying value of the investment until disposition of the stock d. Added to the inventory cost on Hobbes's consolidated balance sheetarrow_forward1.If Company Abee holds consigned goods from Company XyXy, which statement is true? Group of answer choices Neither company will report the consigned inventory as their asset. Both companies will report the consigned inventory as their asset. Company XyXy will report the consigned inventory as their asset. Company Abee will report the consigned inventory as their asset. 2. Inventory that is in transit between the supplier and purchaser should: Group of answer choices not be included in either party's inventory balance. be recorded as inventory by whichever party has paid for the transportation costs as dictated by the FOB terms. be included in the supplier's inventory balance always. be included in the purchaser's inventory balance always. 3. If costs are rising, which inventory costing method will result in the highest ending inventory balance for the period? Group of answer choices Specific identification LIFO FIFO Weighted average 4. If costs are rising, which…arrow_forwardWhen does gain recognition accompany a business combination?a. When a bargain purchase occurs.b. In a combination created in the middle of a fiscal year.c. In an acquisition when the value of all assets and liabilities cannot be determined.d. When the amount of a bargain purchase exceeds the value of the applicable noncurrent assets (other than certain exceptions) held by the acquired company.arrow_forward
- Puncho Company is acquiring the net assets of Semos Company in exchange for common stock valued at $900,000. The Semos identifiable net assets have book and fair values of $400,000 and $800,000, respectively. Compare accounting for the acquisition (including assignment of the price paid) by Puncho with accounting for the sale by Semos.arrow_forwardKiln Corporation is considering the acquisition of Williams Incorporated. Kiln has asked you, its accountant, to evaluate the various offers it might make to Williams Incorporated. The December 31, 2015, balance sheet of Williams is as attached:The following fair values differ from existing book values:Inventory . . . . . . . . . . . . . . . . . . . . $250,000Land. . . . . . . . . . . . . . . . . . . . . . . . 40,000Building . . . . . . . . . . . . . . . . . . . . . 120,000Record the acquisition entry for Kiln Corporation that would result under each of the alternative offers. Value analysis is suggested.1. Kiln Corporation issues 20,000 of its $10 par common stock with a fair value of $25 per share for the net assets of Williams Incorporated.2. Kiln Corporation pays $385,000 in cash.arrow_forwardRingler Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is not expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will Group of answer choices A) be reported in the Other Revenues and Gains section of the income statement. B) effectively reduce the amount to be recorded as the cost of the new asset. C) effectively increase the amount to be recorded as the cost of the new asset. D) be credited directly to the owner's capital account.arrow_forward
- Ringler Corporation exchanges one plant asset for a similar plant asset and gives cash in the exchange. The exchange is not expected to cause a material change in the future cash flows for either entity. If a gain on the disposal of the old asset is indicated, the gain will A) effectively reduce the amount to be recorded as the cost of the new asset. B) be credited directly to the owner's capital account. C) be reported in the Other Revenues and Gains section of the income statement. D) effectively increase the amount to be recorded as the cost of the new asset.arrow_forwardThe following are several figures reported for Allister and Barone as of December 31, 2021: Inventory Sales Investment income Cost of goods sold Operating expenses Allister Barone $ 610,000 $ 410,000 1,220,000 1,020,000 not given 610,000 285,000 510,000 355,000 Allister acquired 90 percent of Barone in January 2020. In allocating the newly acquired subsidiary's fair value at the acquisition date, Allister noted that Barone had developed a customer list worth $78,000 that was unrecorded on its accounting records and had a six- year remaining life. Any remaining excess fair value over Barone's book value was attributed to goodwill. During 2021, Barone sells inventory costing $141,000 to Allister for $202,000. Of this amount, 20 percent remains unsold in Allister's warehouse at year-end. Determine balances for the following items that would appear on Allister's consolidated financial statements for 2021: Inventory Sales Cost of goods sold Operating expenses Net income attributable to…arrow_forwardUnder PFRS 3, when is a gain recognized in consolidating financial information? a. In a combination created in the middle of the fiscal year b. In an acquisition when the value of all assets and liabilities cannot be determined. c. When any bargain purchased is created d. When the amount of a bargain purchase exceeds the value of the applicable liability held by the acquired company.arrow_forward
- Required information A Clarke Corporation subsidiary buys marketable equity securities and inventory on April 1, 2017, for 100,000 won each. It pays for both items on June 1, 2017, and they are still on hand at year-end. Inventory is carried at cost under the lower-of-cost-or-net realizable rule. Currency exchange rates for 1 won follow: $ 0.45 January 1, 2017 April 1, 2017 June 1, 2017 December 31, 2017 =1 won 0.46 =1 0.47 =D1 0.49 =1arrow_forwardOn August 27, 2015, Celgene Corporation acquired all of the outstanding stock of Receptos, Inc., in exchange for $7.6 billion in cash. Referring to Celgene's 2015 financial statements and its July 14, 2015, press release announcing the acquisition, answer the following questions regarding the Receptos acquisition. What amount did Celgene include in pre-combination service compensation in the total consideration transferred? What support is provided for this treatment in the Accounting Standards Codification (see ASC 805-30-30, paragraphs 9-l3)?arrow_forward1. Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $741,400. 2. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $741,400. 3. Record the acquisition of Soriano Co. Assume its initial cash payment to the former owners was $861,500. 4. Record the expenses related to the combination. Assume its initial cash payment to the former owners was $861,500.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning