FUNDAMENTALS OF ADVANCED ACCOUNTING >I
6th Edition
ISBN: 9781307007350
Author: Hoyle
Publisher: MCG/CREATE
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Question
Chapter 5, Problem 13Q
To determine
Explain why the amount of the adjustment changes from year to year.
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Students have asked these similar questions
If a seller makes an intra-entity sale of a depreciable asset at a price above book value, the seller’s beginning Retained Earnings is reduced when preparing each subsequent consolidation. Why does the amount of the adjustment change from year to year?
A gain on a bargain purchase is
A. Recognized in profit or loss in the year of acquisitionB. Amortized in profit or loss over the lower of its legal life and estimated useful lifeC. Recognized in profit or loss in the year of acquisition but only after reassessment of the assets acquired and liabilities assumed in the business combinationD. None of the above
When an entity sells a non-current asset at a profit to another entity within the same group, which of the following adjustments is necessary on consolidation?
Select one:
a. Dr Asset, DR Gain on sale
b. Dr Gain on sale, CR Asset
c. Dr Gain on sale, CR Cash
d. Dr Asset, CR Cash
Chapter 5 Solutions
FUNDAMENTALS OF ADVANCED ACCOUNTING >I
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - James, Inc., sells inventory to Matthews Company,...Ch. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Use the same information as in problem (5) except...Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - What is the total of consolidated cost of goods...Ch. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - What is the consolidated total for inventory at...Ch. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 1DYSCh. 5 - Prob. 2DYS
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- TRUE OR FALSE? The prior period will be affected if during the current year the management of an entity decides to classify a non currrent asset as held for sale.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_forwardWhich of the following statements regarding capital asset holding periods is false? Group of answer choices A. Trade dates, rather than settlements dates, are used to determine the date of acquisition and sale. B.The holding period for property received as a gift usually includes the holding period of the donee. C.The holding period for property acquired from a decedent is long term even if the property is sold less than one year after it was acquired. D. A holding period of exactly one year or more is long term.arrow_forward
- If an entity capitalized transaction costs to a financial asset at fair value through profit or loss, then subsequently adjusted the initial cost to fair value at year-end, what is the overall effect on the current year net income? * A. Current year net income will be understated B. Current year net income will be overstated C. Current year net income will either be overstated or understated, depending on whether the fair value at year end is more than, less than, or equal to the initial cost D. No effectarrow_forwardChoose the correct. When 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_forwardIn reference to the downstream or upstream sale of depreciable assets, which of the following statements is correct? A. Gains and losses appear in the parent-company accounts in the year of sale and must be eliminated by the parent company determining its investment income under equity method of accounting. B. The initial effect of unrealized gains and losses from downstream sales of depreciable asset is different from the sale of non-depreciable assets. C. Gains, but not losses, appear in the parent-company accounts in the year of sale and must be eliminated by the parent company in determining its investment income under the equity method of accounting. D. Upstream sales from the subsidiary to the parent company always result in unrealized gains or losses.arrow_forward
- When an entire interest in a passive activity is disposed of any passive loss carryover with respect to that activity can be deducted by the seller in the year of the sale. True or falsearrow_forwardAn entity classified a noncurrent asset accounted for under the costmodel as held for sale at the current year-end. The entity decided at theend of the following year not to sell the asset but to continue to use it. Theasset should be measured at the end of the following year at A. The lower of carrying amount and recoverable amountB. The higher of carrying amount and recoverable amountC. The lower of carrying amount on the basis that it had never been classified as held forsale and recoverable amountD. The recoverable amountarrow_forward.Goodwill arising from business combination is Charged to retained earnings after the acquisition is completed Amortized over 40 years or its useful life, whichever is longer Amortized over 40 years or its useful life, whichever is shorter Never amortizedarrow_forward
- When should a consolidated entity recognize a goodwill impairment loss? If both the fair value of a reporting unit and its associated implied goodwill fall below their respective carrying amounts. Whenever the entity’s fair value declines significantly. If the fair value of a reporting unit with goodwill fall below its carrying amount. Annually on a systematic and rational basis.arrow_forwardDuring the measurement period, which of the following may affect the amount ofgoodwill from business combination? A.New information regarding estimates in the contingent consideration that are not existing atthe date of acquisitionB.Nothing can affect the amount of goodwill.C.New information regarding estimates in the contingent consideration that are existing at thedate of acquisition.D.New information regarding estimates in the contingent considerationarrow_forwardChoose the correct. When should a consolidated entity recognize a goodwill impairment loss?a. If both the fair value of a reporting unit and its associated implied goodwill fall below their respective carrying amounts.b. Whenever the entity’s fair value declines significantly.c. If the fair value of a reporting unit with goodwill fall below its carrying amount.d. Annually on a systematic and rational basis.arrow_forward
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