ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 6, Problem 6.16Q
To determine
Intercompany transactions:
Consolidated financial statements are prepared by a parent company to consolidate the assets and liabilities of the parent and its subsidiaries. There may be some transactions between these companies which are called intercompany transactions.
To Indicate: the treatment of intercompany inventory profits before and after the acquisition.
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Students have asked these similar questions
SCP Corporation purchased inventory on account
from OBP Corporation . Which of the following
happens immediately after the first step in SCP's
acquisition / payment process ? Select one :
a. The second step in SCP's acquisition / payment
process
b. The second step in OBP's sales / collection
process
c. The first step in OBP's sales / collection process
d. An internal audit of the transaction by OBP
Why do companies that use perpetual inventory systems alsotake an annual physical inventory? When is this physicalinventory usually taken? Why?
The ABC sole proprietorship deals with the trade of IT items and the provision of related services. Carry out the adjustment entries of the accounts for the fiscal year 20X6 as well as those for the determination of the gross profit taking into account the following information:
For the accounting of inventories, the company applies a periodic inventory and evaluates the inventories using the weighted average cost method.
The company trades the kind P. The initial inventory consists of 20 units with a purchase price of € 50 per unit. In the fiscal year, 20X6 bought 80 units for € 55 per unit and 80 units for € 60 per unit. In the inventory of 31/12/20X6, the stocks in the warehouse consist of 30 units whose liquidation price amounts to € 55 per unit.
Total gross merchandise sales amounted to €45,000 and sales returns to €400.
During the 20x6 fiscal year, the company had purchased $1,000 at a $200 exchange rate= € 1. On 31/12/20X6, the current USD exchange rate is $1 =€ 1.2.
The…
Chapter 6 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
Ch. 6 - Why must inventory transfers to related companies...Ch. 6 - Why is there a need for a consolidation entry when...Ch. 6 - Prob. 6.3QCh. 6 - How do unrealized intercompany profits on a...Ch. 6 - How do unrealized intercompany profits on an...Ch. 6 - Prob. 6.6QCh. 6 - Prob. 6.9QCh. 6 - Prob. 6.10QCh. 6 - How is the amount of consolidated retained...Ch. 6 - How will the elimination of unrealized...
Ch. 6 - Prob. 6.14QCh. 6 - Is an inventory sale from one subsidiary to...Ch. 6 - Prob. 6.16QCh. 6 - Prob. 6.1.1ECh. 6 - Prob. 6.1.2ECh. 6 - MultipleChoice Questions on Intercompany Inventory...Ch. 6 - MultipleChoice Questions on Intercompany Inventory...Ch. 6 - Prob. 6.1.5ECh. 6 - Prob. 6.1.6ECh. 6 - Prob. 6.3.1ECh. 6 - Prob. 6.3.2ECh. 6 - Prob. 6.3.3ECh. 6 - Prob. 6.4.1ECh. 6 - Prob. 6.4.2ECh. 6 - Prob. 6.4.3ECh. 6 - Prob. 6.4.4ECh. 6 - Prob. 6.5.1ECh. 6 - Prob. 6.5.2ECh. 6 - Prob. 6.5.3E
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- Below is the net income of New Girl Instrument AG, a private company, computed under the two inventory methods using a periodic system. FIFO Average-Cost 2017 $26,000 $23,000 2018 30,000 25,000 2019 29,000 27,000 2020 34,000 30,000 (ignore tax considerations) Required: a. Assume that in 2020 New Girl decided to change from the FIFO method to the average-cost method of pricing inventories. Prepare the journal entry necessary for the change that took place during 2020, and show net income reported for 2017, 2018, 2019, and 2020. b. Assume that in 2020 New Girl, which had been using the average-cost method since beginning operations in 2017, changed to the FIFO method of pricing inventories. Prepare the journal entry necessary to record the change in 2020, and show net income reported for 2017, 2018, 2019, and 2020.arrow_forwardAnalyzing an Inventory Footnote Disclosure The inventory footnote from Deere & Company's 2018 10-K follows. Inventories A majority of inventory owned by Deere & Company and its U.S. equipment subsidiaries are valued at cost, on the "last-in, first- out" (LIFO) basis. Remaining inventories are generally valued at the lower of cost, on the "first-in, first-out" (FIFO) basis, or net realizable value. The value of gross inventories on the LIFO basis at October 28, 2018, and October 29, 2017, represented 54 percent and 61 percent, respectively, of worldwide gross inventories at FIFO value. If all inventories had been valued on a FIFO basis, estimated inventories by major classification at October 28, 2018, and October 29, 2017, in millions of dollars would have been as follows: S millions 2018 2017 Raw materials and supplies $2,233 $1,688 Work-in-process 776 495 4,777 3,182 7,786 5,365 Finished goods and parts Total FIFO value Less adjustment to LIFO value 1,637 1,461 Inventories $6,149…arrow_forwardOn June 15, 2020, Wynne Corporation accepted delivery of merchandise which it purchased on account. As of June 30, Wynne had not recorded the transaction or included the merchandise in its inventory. The effect of this on its balance sheet for June 30, 2020 would be • assets and liabilities were understated but stockholders' equity was not affected. O stockholders' equity was the only item affected by the omission. O assets, liabilities, and stockholders' equity were understated. O assets and stockholders' equity were overstated but liabilities were not affected.arrow_forward
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