ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 6, Problem 6.9Q
To determine
Concept Introduction:
Intercompany transaction:
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 reporting of the cost of goods sold by the consolidated entity when there have been inter-corporate sales during the period.
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How much is the sales of branch to be included in the combined financial statements?
How much is the cost of goods sold of the branch to be included in the combined financial statements?
How much is the ending inventory of the branch to be included in the combined financial statements?
How much is the true profit (NET INCOME) of the branch?
How much is the adjusted balance of the branch current account immediately prior to combining the financial statements?
For each of the following intercompany transactions, state the principle to be used in accounting for intercompany gains on current and future consolidated income statements:
a.
Gains on merchandise sales
b.
Gains on the sale of land
c.
Gains on the sale of depreciable fixed assets
d.
Interest on intercompany notes
From a consolidated point of view, when should the profit be recognizedon intercompany sales of depreciable assets and non-depreciable assets?
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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- Considering the intercompany transactions, compute for the consolidated net income.arrow_forwardState where each of the following items would appear on a multiple-step income statement: Item (a) Gain on sale of equipment (b) Cost of goods sold (c) Depreciation expense (d) Sales returns and allowances Multiple-Step Income Statement Sectionarrow_forwardIn the income statement, Freight-In is (a) added to purchases. (b) subtracted from purchases. (c) added to sales. (d) subtracted from cost of goods.arrow_forward
- The identifiable assets acquired and liabilities assumed in a business combination are generally measured at: a. Acquisition-date fair values b. Previous carrying amounts c. Fair value less cost to sell d. Costarrow_forwardProfits on sale of inventories between Parent and Subsidiary Companies is when goods are held still as inventories Select one: O a. Recognized O b. Deferred O C. Amortized O d. Realizedarrow_forwardfor the following intercompany transaction state the principle to be used in accounting for intercompany gains on current and future consolidated income statements: Gains on the sale of landarrow_forward
- for the following intercompany transaction state the principle to be used in accounting for intercompany gains on current and future consolidated income statements: Gains on the sale of depreciable fixed assetsarrow_forwardWhat is a consignment arrangement? Explain the accounting treatment of goods held on consignment.arrow_forwardHow are intra-entity inventory transfers treated on the consolidation worksheet and how are they reflected in a consolidated statement of cash flows?arrow_forward
- why would a corporate entity mark up inventory when selling on an intercompany basis?arrow_forwardUnder a consignment arrangement, revenue is recognized when the consigned goods: A. are manufactured. B. are shipped and delivered to the consignee. C.arrow_forwardIn accounting for by-products, when the by-products are sold for more than the estimated sales value, the difference is: a. credited to Gain or Loss on Sale of By-Product b. debited to Gain or Loss on Sale of By-Product c. immaterial, so not recorded. d. credited to By-Product Inventory.arrow_forward
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