Fundamentals of Advanced Accounting
6th Edition
ISBN: 9780077862237
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 5, Problem 9Q
To determine
Explain whether the profit permanently eliminated from the non-controlling interest, or it merely shifted from one period to the next.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Which of the following income items may affect both Consolidated Net Income attributable to Parent and Non-Controlling Interest in Profit? *
A. Gain on bargain purchase arising from business combination.
B. Gain (loss) arising from intercompany sale of fixed assets from parent to subsidiary.
C. Answer not given
D. Amortization of excess in merchandise inventory of the acquired company.
E. Impairment of a goodwill recognized using the proportionate or relevant share.
Please answer the following questions relating to unrealized profit in a business combination.
1) Intra entity transfers between the components of business combinations are quite common. Why do these intra company transactions occur frequently?
2) How are unrealized inventory gross profit created, and what are the necessary consolidation entries created to account for these gains?
3) How do intra entity profit present in any year affect the noncontrolling Interest calculation?
Starting from the separate cost of goods sold of the affiliates, the consolidated cost of goods sold will be affected by all of the following, except:
A. Amortization of the excess of inventory FV over BV of the subsidiary
B. Unrealized profit on ending inventory
C. Excess of inventory FV over BV of the subsidiary at the date of acquisition
D. Realized profit on beginning inventory
Chapter 5 Solutions
Fundamentals of Advanced Accounting
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
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The consolidation procedures for intercompany sales are similar for upstream and downstreams sales a. Under a periodic inventory system but not under a perpetual inventory system b. If the merchandise is transferred at cost c. If the merchandise is immediately sold to outside parties d. When the subsidiary is 100% owned. Sales from one subsidiary to another are called a. Downstream sales b. Inter subsidiary sales c. Horizontal sales d. Upstream sales Non-controlling interest in consolidated income is never affected by a. Sale of Parent to unaffiliated company b. Downstream sales c. Upstream Sales d. Non-controlling interest is affected by all salesarrow_forwardIn determining controlling interest in consolidated income in the consolidated financial statements, unrealized intercompany profit on inventory acquired by a parent from its subsidiary should: a. Not be eliminated b. Be eliminated to the extent of the non-controlling interest in the subsidiary. c. Be eliminated to the extent of the parent company’s controlling interest in the subsidiary d. Be eliminated in fullarrow_forwardIn the cost method of acquisition income is recognized only when the subsidiary declares dividends Select one: True Falsearrow_forward
- Explain why consolidated entities defer intra-entity gross profit in ending inventory and the consolidation procedures required subsequently to recognize profits.arrow_forwardNon-controlling interest in consolidated income is never affected by: a. Sale of Parent to unaffiliated company b. Non-controlling interest is affected by all sales c. Downstream sales d. Upstream Salesarrow_forwardUnder the Cost Method The parent records its pro rata share of the subsidiary’s post-acquisition income as an increase to the investment account and reduces the investment account with its share of the dividends declared by the subsidiary. The parent’s investment in the subsidiary is recorded at cost, and never changed thereafter. The parent records it pro rata share of the subsidiary’s cumulative earnings as an increase to the investment account and reduces the investment account with its share in the dividends declared by the subsidiary The parent’s investment in the Subsidiary is recorded at cost and reduced by an excess dividends received from subsidiary.arrow_forward
- From a consolidated point of view, the intercompany gain or loss on a parent’s sale of a non-depreciable asset to subsidiary is realized when: a. The parent company sells the asset to the subsidiary b. The subsidiary start to use the asset c. The subsidiary resells the asset to the parent d. The subsidiary resells the asset to the outsiderarrow_forwardStarting from the separate cost of goods sold of the affiliates, the consolidated cost ofgoods sold will be affectedby all of the following, except: A.Excess of inventory FV over BV of the subsidiary at the date of acquisitionB.Unrealized profit on ending inventoryC.Realized profit on beginning inventoryD.Amortization of the excess of inventory FV over BV of the subsidiaryarrow_forwardStarting from the separate cost of goods sold of the affiliates, the consolidatedcost of goods sold will be affectedby all of the following, except: a.Realized profit on beginning inventoryb.Excess of inventory FV over BV of the subsidiary at the date of acquisitionc.Amortization of the excess of inventory FV over BV of the subsidiaryd. Unrealized profit on ending inventoryarrow_forward
- The non-controlling interest in consolidated income when the selling affiliate isan 80% owned subsidiary is calculated by multiplying the non-controllingminority delete minority ownership percentage by the subsidiary’s reported netincome. A. Plus realized profit in ending inventory less realized profit in beginning inventory B. Less unrealized profit in ending inventory plus realized profit in beginning inventory C. Less realized profit in ending inventory plus realized profit in beginning inventory. D. Plus unrealized profit in ending inventory less unrealized profit in beginning inventoryarrow_forwardThe 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 incomearrow_forwardA bargain purchase arises when the price paid to acquire a controlling interest in another company is less than the acquirer’s share of the fair value of net assets of the company being acquired. At the end of your preliminary analysis, you believe that a business combination results in a bargain purchase. What is your next step? A. Recognize an immediate gain in the consolidated statement of profit and loss without further analysis. B. Recognize a liability in the consolidated balance sheet. C. Contact the acquiree to confirm its intention. D. Reassess each step of your analysis to confirm your preliminary findings.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning