Chapter 20, Problem 1QA

Consolidated financial statements are required in which ofthe following situations?a. Only when a company can exert significant influenceover another company.b. Only when a company has a passive investment inanother company.c. Only when a parent company can exercise control overits subsidiary.d. None of the above.

If 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 income

Ma3. Explain, with reasons, how the investments in a subsidiary and associate will be treated in the consolidated financial statements of a parent's group.

What is a noncontrolling interest? Select one: A. A component of debt representing amounts owed to a subset of investors B. Amounts distributed to investors that own less than a controlling interest C. The portion of a subsidiary’s net assets not owned by the parent-company D. An amount equal to investor contributions less dividends distributed

Please concisely explain how the excess investment cost over book value is allocated. When is the intra-entity’s profits recognized on transfers between the investor and investee? What is the controlling interest percentage for a consolidated accounting financial statement?

What is a subsidiary’s functional currency? Choose the correcta. The parent’s reporting currency.b. The currency used by the parent to acquire the subsidiary.c. The currency in which the entity primarily generates and expends cash.d. Always the currency of the country in which the company has its headquarters.

Finance companies can be independently owned.  Many are subsidiaries of financial institutions or other corporations.  Several automobile companies have finance subsidiaries.  Discuss the advantages of a captive finance company.

The investment in subsidiary should be recorded on the parent’s book at?

What is a subsidiary’s functional currency?a. The parent’s reporting currency.b. The currency used by the parent to acquire the subsidiary.c. The currency in which the entity primarily generates and expends cash.d. Always the currency of the country in which the company has its headquarters.