Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 4, Problem 6Q
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Explain whether Company A should adjust its consolidated balances for the pre-acquisition subsidiary revenues and expenses.
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Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis.
(i) Prepare all the relevant journal entries in the separate financial statements of the respective companies.
(ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent.
(iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries.
(a) On 20 December 20x1, a 90%-owned Subsidiary sold a piece of inventory which it bought for $200,000 to its Parent for $300,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $250,000 on this date.
(b) On 20 December 20x1, a Parent paid management fee of $200,000 to its 90%-owned Subsidiary. The Subsidiary recognised…
Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis.
(i) Prepare all the relevant journal entries in the separate financial statements of the respective companies.
(ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent.
(iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries.
(c)On 20 December 20x1, a 70%owned Subsidiary sold a piece of inventory Z which it bought for $300,000 to its Parent for $200,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $190,000 on this date.
Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis.
(i) Prepare all the relevant journal entries in the separate financial statements of the respective companies.
(ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent.
(iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries.
a)On 20 December 20x1, a 60%-owned Subsidiary paid rental of $200,000 to its Parent.The Parent recognised the rental as income whilst the Subsidiary company recognised the rental paid as an expense. The space area rented by the Subsidiary from the Parent comprises 2% of the building for which the Parent rented out to other external parties. In the separate financial statements of the Parent, the…
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- Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. Scenario (b) On 20 December 20x1, a 60%-owned Subsidiary paid rental of $200,000 to its Parent.The Parent recognised the rental as income whilst the Subsidiary recognised the rental paid as an expense. The space area rented by the Subsidiary from the Parent comprises 98% of the building for which the Parent occupies the remaining 2% thereof. In the separate financial statements of the Parent, the…arrow_forwardAssume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. (a) On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary. The Subsidiary recognised the interest as income whilst the Parent recognised the interest paid as an expense.arrow_forwardAssume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. (a) On 20 December 20x1, a 70%-owned Subsidiary sold a piece of inventory X which it bought for $200,000 to its Parent for $300,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $250,000 on this date.arrow_forward
- Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis.For each of the following independent scenarios in each of the independent parts: (i)Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii)Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii)Compareandcontrastthe accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. (a)On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary.The Subsidiary recognised the interest as income whilst the Parent recognised the interest paid as an expense. (b)On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary. The Subsidiary recognised the interest…arrow_forwardAssume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis.For each of the following independent scenarios in each of the independent parts: (i)Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii)Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii)Compareandcontrastthe accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. Scenario (b) On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary. The Subsidiary recognised the interest as income whilst the Parent properly capitalised the interest paid as part of the cost of its construction work-in-progress in accordance with SFRS(I) 1- 23: Borrowing Costs.arrow_forwardAssume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. For each of the following independent scenarios in each of the independent parts: (1) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. Part A (a) On 20 December 20x1, a 90%-owned Subsidiary sold a piece of inventory which it bought for $200,000 to its Parent for $300,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $250,000 on this date. (b) On 20 December 20x1, a Parent…arrow_forward
- Determine the amounts that would appear in the consolidated financial statements of PubCorporation and Sub for each of the following: 4. Consolidated retained earnings at December 31, 2019 5. Consolidated net income for 2019 6. Non-controlling interest at December 31, 2018 7. Non-controlling interest at December 31, 2019arrow_forwardOn January 2, Year 4, Brady Ltd., a private company, purchased 80% of the outstanding shares of Partridge Ltd. for $6,020,000. Partridge's statement of financial position and the fair values of its identifiable assets and liabilities for that date were as follows: Plant and equipment (net) Patents (net) Inventory Accounts receivable Cash Ordinary shares Retained earnings 10% bonds payable Accounts payable • Year 4: $82,000 Year 6: $64,750 The patents had a remaining useful life of ten years on the acquisition date. The bonds were issued on January 1. Year 2, and mature on December 31, Year 13. Goodwill impairment losses were as follows: Plant and equipment (net) Patents (net) Partridge declared and paid dividends of $140,000 in Year 6. Brady uses ASPE for reporting purposes. It elected to use the straight-line method to amortize any premium or discount on bonds payable. Investment in Partridge Ltd. (equity method) Inventory Accounts receivable Cash On December 31, Year 6, the financial…arrow_forwardDetermine the amounts that would appear in the consolidated financial statements of Pub Corporation and Sub for each of the following: 1. Goodwill at December 31, 2019 2. Non-controlling interest share for 2019 3. Consolidated retained earnings at December 31, 2018 4. Consolidated retained earnings at December 31, 2019 5. Consolidated net income for 2019 6. Non-controlling interest at December 31, 2018 7. Non-controlling interest at December 31, 2019arrow_forward
- Requirements: WHAT IS THE AMOUNT OF: A. Goodwill to be reported on the consolidated balance sheet on January 1, 2x19? B. Non-controlling interest on January 1, 2x19? C. Consolidated operating expenses for 2x19? D. Consolidated profit attributable to parent on December 31, 2x19? E. Non-controlling interest in profit of Subsidiary Company on December 31, 2x19? F. Non-controlling interest is to be presented in the consolidated statement of financial position on December 31, 2x19? G. Consolidated retained earnings attributable to Parent's shareholder equity on December 31, 2x19? H. Total consolidated assets on December 31, 2x19?arrow_forwardREQUIRED Determine the amounts that would appear in the consolidated financial statements of Pub Corporation and Sub for each of the following:1. Goodwill at December 31, 2019 2. Non-controlling interest share for 2019 3. Consolidated retained earnings at December 31, 2018 4. Consolidated retained earnings at December 31, 2019 5. Consolidated net income for 2019 6. Non-controlling interest at December 31, 2018 7. Non-controlling interest at December 31, 2019arrow_forward1. ABC Company has several subsidiaries that are included in its consolidated financial statements. In its December 31, year 1 trial balance. ABC had the following intercompany balances before eliminations: Determine intercompany receivables.arrow_forward
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