Subsidiary
During the preparation of consolidated financial statements, the amount of subsidiary
To explain : Why are the subsidiary preferred dividends that are paid to non-affiliates are deducted from earnings in calculating the consolidated net income? When is it not appropriate to deduct subsidiary preferred dividends in computing consolidated net income
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Advanced Financial Accounting
- How should negative goodwill be shown on the consolidated financial statements of the acquirer? Group of answer choices As a liability on the statement of financial position As a loss on the statement of comprehensive income As a separate amount under shareholders' equity on the statement of financial position As a gain on the statement of comprehensive incomearrow_forwardWhich of the following correctly reflects the effect of dividend? On the date of distribution of large share dividend: ASSETS - No effect, LIABILITIES - No effect, EQUITY - No effect On the date of declaration of dividend: ASSETS - No effect, LIABILITIES - Decrease, EQUITY - Decrease On the date of payment of property dividend: ASSETS - Decrease, LIABILITIES - Decrease, EQUITY - Decrease On the date of declaration of small share dividend: ASSETS - No effect, LIABILITIES - No effect, EQUITY - Decreasearrow_forwardWhich of the following correctly reflects the effect of dividend? a. On the date of distribution of large share dividend: ASSETS - No effect, LIABILITIES - No effect, EQUITY - No effect b. On the date of payment of property dividend: ASSETS - Decrease, LIABILITIES - Decrease, EQUITY - Decrease c. On the date of declaration of small share dividend: ASSETS - No effect, LIABILITIES - No effect, EQUITY - Decrease d. On the date of declaration of dividend: ASSETS - No effect, LIABILITIES - Decrease, EQUITY - Decrease Which of the following illustrates the effect of 15% share dividend declared and issued when the market price is higher than the par value? * a. RETAINED EARNINGS - Increase, SHARE PREMIUM - Decrease, TOTAL EQUITY - Increase b.RETAINED EARNINGS - Increase, SHARE PREMIUM - Increase, TOTAL EQUITY - Increase c. RETAINED EARNINGS - Decrease, SHARE PREMIUM - Increase, TOTAL EQUITY - No…arrow_forward
- In computing the noncontrolling interest’s share of consolidated net income, how should the subsidiary’s net income be adjusted for intra-entity transfers?a. The subsidiary’s reported net income is adjusted for the impact of upstream transfers prior to computing the noncontrolling interest’s allocation.b. The subsidiary’s reported net income is adjusted for the impact of all transfers prior to computing the noncontrolling interest’s allocation.c. The subsidiary’s reported net income is not adjusted for the impact of transfers prior to computing the noncontrolling interest’s allocation.d. The subsidiary’s reported net income is adjusted for the impact of downstream transfers prior to computing the noncontrolling interest’s allocation.arrow_forwardThe fair value method of accounting for stock a.recognizes dividends as income b.requires the investment to be decreased by the reported net income of the investee c.requires the investment to be increased by the reported net income of the investee d.is only appropriate as part of a consolidationarrow_forwardWhich of the following correctly reflects the effect of dividend? a. On the date of payment of property dividend: ASSETS - Decrease, LIABILITIES - Decrease, EQUITY - Decrease b. On the date of declaration of small share dividend: ASSETS - No effect, LIABILITIES - No effect, EQUITY - Decrease c. On the date of declaration of dividend: ASSETS - No effect, LIABILITIES - Decrease, EQUITY - Decrease d. On the date of distribution of large share dividend: ASSETS - No effect, LIABILITIES - No effect, EQUITY - No effectarrow_forward
- Please concisely explain how the excess investment cost over book value is allocated. When is the intra-entity’s profits recognized on transfers between the investor and investee? What is the controlling interest percentage for a consolidated accounting financial statement?arrow_forwardWhich one of the following statements is incorrect with regards to non-controlling interests? 1. Non-controlling interests can be calculated using the analysis of owners’ equity of the subsidiary. 2. The retained earnings total in the consolidated statement of changes in equity does not include the non-controlling interests amount. 3. Non-controlling interests reduces the profit of the owners of the parent in the consolidated statement of profit or loss and other comprehensive income. 4.Non-controlling interests are presented as an asset in the consolidated statement of financial position.arrow_forwardWhich of the following statements is correct? Multiple Choice Earnings and profits are exactly the same as retained earnings. Distributions of appreciated property create a gain to the stockholder recipient. A distribution from earnings and profits is a dividend. Distributions paid in excess of earnings and profits are taxable to the extent of stockholder basis.arrow_forward
- Choose the correct. In computing the noncontrolling interest’s share of consolidated net income, how should the subsidiary’s net income be adjusted for intra-entity transfers? a. The subsidiary’s reported net income is adjusted for the impact of upstream transfers prior to computing the noncontrolling interest’s allocation. b. The subsidiary’s reported netincome is adjusted for the impact of all transfers prior to computing the noncontrolling interest’s allocation. c. The subsidiary’s reported net income is not adjusted for the impact of transfers prior to computing the noncontrolling interest’s allocation. d. The subsidiary’s reported net income is adjusted for the impact of downstream transfers prior to computing the noncontrolling interest’s allocation.arrow_forwardHow is non-controlling interest in the subsidiary’s net assets presented in the consolidated statement of financial position? a. Within equity but separately from the equity of the owners of the parents. b. Within equity as part of retained earnings. c. Any of these as a matter of accounting policy choice. d. As a mezzanine item between liabilities and equity.arrow_forwardHow should an associate be accounted for in the consolidated statement of profit or loss?A The associate's income and expenses are added to those of the group on a line-by-line basis.B The group share of the associate's income and expenses is added to the group figures on a line-byline basis.C The group share of the associate's profit after tax is recorded as a one-line entry.D Only dividends received from the associate are recorded in the group statement of profit or loss.arrow_forward
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT