Is the computation of noncontrolling interest in net income of a partially owned subsidiary affected by the unconfirmed intercompany profit on a. b. d. upstream sales? Yes No Yes No downstream sales? Yes Yes No No reported in
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- The adjusting entries for unrealised profit arisen from trading of goods betweenparent and wholly owned subsidiary. give the journal : If the seller is parent If the seller is subsidiaryIf the entity is using the equity method to account for investment in subsidiary, the entry to recognize dividends received from the subsidiary will: a.Be recognized in profit or loss b.Increase the carrying amount of investment c.Decrease the carrying amount of investment d.Be recognized in other comprehensive incomeThe non-controlling interest in net assets of a partially owned subsidiary is: a. Decreased by amortization of differences between fair values and carrying values of the subsidiary’s net assets net assets when carrying values are greater than fair values. b. Decreased by share in impairment loss in goodwill if proportionate method of measuring NCI is used c. Increased by the NCI’s share of subsidiary’s dividends and decreased by the NCI’s share of subsidiary’s adjusted net income d. Decreased by the NCI’s share of subsidiary’s dividends and increased by the NCI’s share of subsidiary’s adjusted net income
- Consolidated net income for a parent company and its partially owned subsidiary is best defined as the parent company’sA. Recorded net income plus the subsidiary’s recorded net income after adjustment from any amortization of excess amount from book value compared to fair value.B. Recorded net incomeC. Income from independent operations plus subsidiary’s income resulting from transactions with outside parties after adjustment from any amortization of excess amount from book value compared to fair value.D. Recorded net income plus the subsidiary’s recorded net incomeThe non-controlling interest in net assets of a partially owned subsidiary is: O Decreased by amortization of differences between fair values and carrying values of the subsidiary's net assets net assets when carrying values are greater than fair values. O Decreased by share in impairment loss in goodwill, if proportionate method of measuring NCI is used Increased by the NCI's share of subsidiary's dividends and decreased by the NCI's share of subsidiary's adjusted net income O Decreased by the NCI's share of subsidiary's dividends and increased by the NCI's share of subsidiary's adjusted net incomeWhich of the following statements is correct? Statement 1: Any unrealized profit or loss made by the subsidiary should be eliminated from its profit. Statement 2: only the group portion of any unrealized profit need to be eliminated.
- When an investor uses the cost method to account for investments in subsidiary, cash dividends received by the investor from the investee should normally be recorded as: A. Ignored. B. Dividend income. C. An addition to the investor’s share of the investee’s profit. D. A deduction from the investment account E. A deduction from the investor’s share of the investee’s profit.Which of the following is a characteristic of the cost method of accounting for subsidiary operations? Select one: a. Parent company net income equals consolidated net income. b. More working paper eliminations are required than for the equity method of accounting. c. Consolidated amounts differ from the comparable amounts under the equity method of accounting. d. None of the aboveIn computing the noncontrolling interest’s share of consolidated net income, how should the subsidiary’s net income be adjusted for intra-entity transfers?a. The subsidiary’s reported net income is adjusted for the impact of upstream transfers prior to computing the noncontrolling interest’s allocation.b. The subsidiary’s reported net income is adjusted for the impact of all transfers prior to computing the noncontrolling interest’s allocation.c. The subsidiary’s reported net income is not adjusted for the impact of transfers prior to computing the noncontrolling interest’s allocation.d. The subsidiary’s reported net income is adjusted for the impact of downstream transfers prior to computing the noncontrolling interest’s allocation.
- Consolidated Net Income is equal to: Multiple Choice the sum of the net incomes of both the parent and its subsidiaries less any inter-company dividends. the parent's net income excluding any income arising from its investment in the Subsidiary, plus the net income of the subsidiary less the amortization of the acquisition differential and the impairment of goodwill. the parent's net income excluding any income arising from its investment in the subsidiary. the sum of the net incomes of both the parent and its subsidiaries.Gain on Bargain Purchase treated as other income in a business combination should be: a. Credited to the income account of both acquirer and acquire b. Credited to the share premium account of the acquirer c. Credited to a deferred credit account d. Credited to the income account of the acquirerChoose the correct. In computing the noncontrolling interest’s share of consolidated net income, how should the subsidiary’s net income be adjusted for intra-entity transfers? a. The subsidiary’s reported net income is adjusted for the impact of upstream transfers prior to computing the noncontrolling interest’s allocation. b. The subsidiary’s reported netincome is adjusted for the impact of all transfers prior to computing the noncontrolling interest’s allocation. c. The subsidiary’s reported net income is not adjusted for the impact of transfers prior to computing the noncontrolling interest’s allocation. d. The subsidiary’s reported net income is adjusted for the impact of downstream transfers prior to computing the noncontrolling interest’s allocation.