ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Question
Chapter 7, Problem 7.2C
To determine
Concept Introduction:
The intercompany transactions occur when the unit of legal entity is having transactions with another unit of the similar entity. This transaction can be divided into two categories such as direct and indirect intercompany transfer. The direct transfer occurs when there is transfer between the different units of the same entity and indirect transfer occurs when the unit of entity acquires debt or assets issued to unrelated entity through another unit of the same entity. This type of transfer will help the entity in improving the flow of finance and asset in an efficient manner.
Requirement 1
To Prepare:
A memo detailing the legal services provided by parent entity to subsidiary.
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Students have asked these similar questions
King's Road recently acquired all of Oxford Corporation's stock and is now consolidating the financial data of this
new subsidiary. King's Road paid a total of $895,000 for Oxford, which has the following accounts:
Fair Value
$ 183,000
142,000
104,000
Tax Basis
$ 183,000
142,000
104,000
Accounts receivable
Inventory
Land
Buildings
Equipment
234,000
235,000
(245,000)
190,000
184,000
(245,000)
Liabilities
Required:
a. What amount of deferred tax liability arises in the acquisition?
b. What amounts will be used to consolidate Oxford with King's Road at the date of acquisition?
c. On a consolidated balance sheet prepared immediately after this takeover, how much goodwill should King's
Road recognize? Assume a 21 percent effective tax rate.
Perview Incorporated owns 90% of Software Company. Software Company owns 70% of Bronston Company. Operational income figures for the current year are presented below, which contain no
investment income. Included in Software's income is a $100,000 unrealized gain on intercompany transfers and Bronston's income is a $50,000 unrealized gain on intercompany transfers to
Perview. Perview Incorporated Software Company Bronston Company Operational Income $ 600, 000 $ 450,000 $ 350,000 What is Perview Incorporated's realized income for the current year?
Multiple Choice $1, 104, 000 $1, 100, 000 $1, 122, 000 $1, 176, 000 $1, 257,000
Part B
Boromir Ltd owns 100% of Samwise Ltd, which in turn owns 100% of Saruman Ltd.
During the financial reporting period, Boromir Ltd sells inventory to Samwise Ltd at a sales price of $350,000, which cost Boromir Ltd $200,000 to produce. Samwise Ltd subsequently sells the same inventory to Saruman Ltd for $400,000 without incurring any additional costs.
By the end of the financial reporting period, Saruman Ltd has sold half of this inventory to companies outside the group for $450,000, and kept the remining half of the inventory on hand.
Required:
a) From the economic entity’s perspective (ie. the group’s perspective), determine the sales revenue for the financial reporting period, and explain your answer.
Type your answer here
b) From the economic entity’s perspective (ie. the group’s perspective), determine the value of closing inventory for the financial reporting period, and explain your answer.
Type your answer here
Chapter 7 Solutions
ADVANCED FINANCIAL ACCOUNTING IA
Ch. 7 - Prob. 7.1QCh. 7 - Prob. 7.2QCh. 7 - Prob. 7.3QCh. 7 - Prob. 7.4QCh. 7 - Prob. 7.5QCh. 7 - Prob. 7.6QCh. 7 - Prob. 7.7QCh. 7 - Prob. 7.8QCh. 7 - Prob. 7.9QCh. 7 - Prob. 7.10Q
Ch. 7 - Prob. 7.11QCh. 7 - Prob. 7.12QCh. 7 - Prob. 7.13QCh. 7 - Prob. 7.14QCh. 7 - Prob. 7.15QCh. 7 - Prob. 7.16QCh. 7 - Prob. 7.17QCh. 7 - Prob. 7.18AQCh. 7 - Prob. 7.1CCh. 7 - Prob. 7.2CCh. 7 - Prob. 7.3CCh. 7 - Prob. 7.4CCh. 7 - Prob. 7.5CCh. 7 - Prob. 7.1.1ECh. 7 - Prob. 7.1.2ECh. 7 - Prob. 7.1.3ECh. 7 - Prob. 7.1.4ECh. 7 - Prob. 7.1.5ECh. 7 - Prob. 7.2.1ECh. 7 - Prob. 7.2.2ECh. 7 - Prob. 7.2.3ECh. 7 - Prob. 7.2.4ECh. 7 - Prob. 7.2.5ECh. 7 - Prob. 7.2.6ECh. 7 - Prob. 7.3ECh. 7 - Prob. 7.4ECh. 7 - Prob. 7.5ECh. 7 - Prob. 7.6ECh. 7 - Prob. 7.7ECh. 7 - Transfer of Depreciable Asset at Year-End Pitcher...Ch. 7 - Prob. 7.9ECh. 7 - Sale of Equipment to Subsidiary in Current Period...Ch. 7 - Prob. 7.11ECh. 7 - Prob. 7.12ECh. 7 - Prob. 7.13ECh. 7 - Prob. 7.14ECh. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - Prob. 7.21ECh. 7 - Prob. 7.22ECh. 7 - Prob. 7.23AECh. 7 - Prob. 7.24PCh. 7 - Prob. 7.25PCh. 7 - Prob. 7.26PCh. 7 - Prob. 7.27PCh. 7 - Prob. 7.28.1PCh. 7 - Prob. 7.28.2PCh. 7 - Prob. 7.28.3PCh. 7 - Prob. 7.28.4PCh. 7 - Prob. 7.29PCh. 7 - Prob. 7.30PCh. 7 - Prob. 7.31PCh. 7 - Prob. 7.32PCh. 7 - Prob. 7.33PCh. 7 - Prob. 7.34PCh. 7 - Prob. 7.35PCh. 7 - Prob. 7.37PCh. 7 - Prob. 7.38PCh. 7 - Prob. 7.41AP
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