Explain the impact that a net operating loss of an acquired affiliate has on consolidated figures.
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Explain the impact that a net operating loss of an acquired affiliate has on consolidated figures.
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- 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.A) When preparing consolidated financial statement workpapers, unrealized intercompany gains, as a result of equipment or inventory sales by affiliates, are allocated proportionately by percent of ownership between parent and subsidiary only when selling affiliate is a. The parent, and the subsidiary is less than wholly owned. b. The subsidiary, and the subsidiary are less than wholly owned c. A wholly owned subsidiary d. The parent of a wholly owned subsidiary. B) Gain or loss returning from an intercompany sale of equipment between a parent and a subsidiary is a. Considered to be realized over the remaining useful life of the equipment as an adjustment to depreciation in the consolidation statements. b. Considered to be unrealized in the consolidated statements until the equipment is sold to a third party c. Amortized over a period not less than 2 years and not greater than 40 years. d. Recognized in the consolidated statements in the year of the saleWhen we are preparing consolidated financial statements, will the financial statements of the parent entity, or the subsidiary companies, as at the beginning of the financial period reflect prior consolidation adjustments? Why?
- Describe the difference between the economic entity concept and the parent company concept approaches to the reporting of subsidiary assetsand liabilities in the consolidated financial statements on the date of the acquisition.Prepare the set of consolidated financial statement of financial position on the date of acquisition by showing the consolidation procedures.Explain why consolidated entities defer intra-entity gross profit in ending inventory and the consolidation procedures required subsequently to recognize profits.
- If a revaluation of the subsidiary’s assets is performed on consolidation, the subsidiary’s assets are carried into the consolidated statement of financial position at: Select one: a. Net present value. b. Historical cost. c. Fair value. d. Current replacement cost.Determine the consolidated amounts at the time of acquisition: Consolidated Assets _____ Consolidated Liability _____ Consolidated Share Capital _____ Consolidated APIC _____ Consolidated RE _____ Consolidated SHE _____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?
- At acquisition date, the net assets of the acquired subsidiary are included in the consolidated financial statements at their acquisition date fair value. However, most of the parent's assets and liabilities are measured on a historical cost basis. Is this consistent? Explain Briefly.How are rights, warrants, and options of subsidiary companies treated in the computation of consolidated EPS?At acquisition date, the net assets of the acquired subsidiary are included in the consolidated financial statements at their acquisition date fair value. However, most of the parent's assets and liabilities are measured on a historical cost basis. Is this consistent?