(b) On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary. The Subsidiary recognised the interest as income whilst the Parent properly capitalised the interest paid as part of the cost of its construction work-in-progress in accordance with SFRS(I) 1- 23: Borrowing Costs.
Q: What is a statutory merger?a. A merger approved by the Securities and Exchange Commission.b. An…
A: The correct answer is Option (d).
Q: When we are preparing consolidated financial statements, will we have to eliminate the parent…
A: The parent company will report the investment in subsidiary as it's asset in books of accounts. But…
Q: December 31 consolidated financial statements are being prepared for Allsports Company and its new…
A: Consolidated financial statements: When an investor company holds above 50% in the outstanding stock…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: SUBSIDIARY BOOKS- DATE PARTICULARS DEBIT $ CREDIT $ 20-DEC-1. Cash…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: SOLUTION- JOURNAL IS A BOOK IN WHICH ALL THE TRANSACTIONS ARE RECORDED IN CHRONOLOGICAL ORDER.
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: SOLUTION- JOURNAL ENTRY IS THE ACT OF KEEPING OR MAKING RECORDS OF ANY TRANSACTIONS EITHER ECONOMIC…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: Kent Ltd owns all of the shares of Lodh Ltd. That is Lodh Ltd is a wholly own subsidiary of Kent…
A: Kent Ltd is a parent company And, Lodh Ltd is a wholly owned subsidiary of Kent Ltd.
Q: On September 17, 2021 Ziltech inc entered into an agreement to sell one of its divisions that…
A: The assets are recognized as held for sale if it satisfies some conditions are as follows:…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: Intragroup transactions are transactions that occur between entities in the group. They can be…
Q: Which one of the following statements is correct with regards to a 70%-owned subsidiary? 100% of…
A: Merger & Acquisition refers to the process of gaining ownership in the other organization by…
Q: On January 1, 20X5, Potter Corporation started using a wholly owned subsidiary to deliver all its…
A: A journal entry is a form of accounting entry that is used to report a business transaction in a…
Q: On May 1, Donovan Company reported the following account balances:Current assets . . . . . . . . . .…
A: Calculation of revised building and equipment: Calculation of Adjusted net assets:
Q: will enter into liquidation and DIAPHANOUS agreed to reimburse TRANSPARENT for liquidation costs…
A: Computation of Purchase Consideration = 4,000,000 + 200,000 = 4,200,000
Q: In connection with the examination of the consolidated financial statements of Mott Industries,…
A: Financial statements contain the overall picture of the enterprise. These statements furnish the…
Q: Intra group Transactions Kent Ltd owns all the share capital of Lodh Ltd. That is, Lodh Ltd is a…
A: The question is related to Consolidated Financial Statements. Kent is a parent company of Lodh…
Q: On January 1, 20x1, DIAPHANOUS Co. acquired all of the identifiable assets and assumed all of the…
A: The negative goodwill arises when the assets are sold for a price lesser than their market value.…
Q: 188. Bird Corporation has several subsidiaries that are included in its consolidated financio…
A: Consolidated balance sheet: This balance sheet represents the assets and liabilities of the parent…
Q: On May 1, Donovan Company reported the following account balances: Current assets $…
A: Given that: Legal and accounting fees payable = $22500 Contingent Liability = $27200 Donovan's…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: SOLUTION- JOURNAL ENTRY IS USED TO RECORD A BUSINESS TRANSACTION IN THE ACCOUNTING RECORD OF A…
Q: The issuance of FASB guidance regarding consolidation of all majority-owned subsidiaries required…
A: FASB coding: FASB accounting standards codification is the source through which the users can access…
Q: Simms Corp. controlled four domestic subsidiaries and one foreign subsidiary. Prior to the current…
A: While consolidating foreign subsidiary,, the golden rule is to arrive at the correct amount for each…
Q: During a fiscal year, the balance of a parent company's Investment in Subsidiary ledger account for…
A: An equity measure is a method of accounting in which an investment is initially recognized at cost…
Q: A. Prepare the journal entry(s) on the books of Al- Maha Company to record the purchase of the…
A: a). Journal Entries Date Particulars Debit Credit Jan 01.2015 Investment in AI-Yasa company…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…
Q: On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary. The Subsidiary…
A: Here in this question, we are required to pass entry for interest income entry in separate financial…
Q: Kent Ltd owns all of the shares of Lodh Ltd. That is Lodh Ltd is a wholly own subsidiary of Kent…
A: GIVEN Kent Ltd owns all of the shares of Lodh Ltd. That is Lodh Ltd is a wholly own subsidiary…
Q: How much should Beasley record as total assets acquired in the Donovan merger?
A: The answer for the multiple choice question and relevant working are presented hereunder : The…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: SOLUTION- JOURNAL ENTRY IS USED TO RECORD A BUSINESS TRANSACTION IN THE ACCOUNTING RECORD OF A…
Q: On May 1, Donovan Company reported the following account balances:Current assets . . . . . . . . . .…
A: Consolidated financial statements: When an investor company holds above 50% in the outstanding stock…
Q: On May 1, Donovan Company reported the following account balances: Current assets $…
A: The value that Beasley should record as total liabilities incurred or assumed in connection with the…
Q: Consolidated financial statements are typically prepared when one company has a controlling interest…
A: Introduction Consolidation of financial statements, is aggregation of financial statements of two…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: SOLUTION- JOURNAL ENTRY IS THE COMPANY'S OFFICIAL BOOK IN WHICH ALL TRANSACTIONS ARE RECORDED IN…
Q: Use the follouing information for the next two questions: On January 1, 20x1, Entity A acquires…
A: It is pertinent to note that as per PFRS 3 in a business combination all the identifiable net assets…
Q: In the consolidated statement of financial position of CANBERRA Company at December 31, 2021, how…
A: Payable to related parties is 140,000
Q: On May 1, Donovan Company reported the following account balances: Current assets $…
A: Calculation of net value of building and equipment is as follows: The result of the above table is…
Q: ABC Company has several subsidiaries that are included in its consolidated financial statements. In…
A: Inter Company Balances Debit Credit Current Receivable due from Main Co $ 32,000…
Q: Which of the following statements is incorrect concerning the preparation of consolidated financial…
A: For preparation of consolidated financial statements: 1. Uniform accounting policies to be applied…
Q: What total amount should be reported as related party lisclosures in the notes to Dean Company's…
A: Solution Concept In the given question , Dean company acquired 100% of Morey company The acquisition…
Q: DEF Company has several subsidiaries that are included in its consolidated financial statements. In…
A: GIVEN Dr Cr Current Receivable Due from Main Co. 32,000 Noncurrent Receivable from…
Q: Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further…
A: Intragroup transactions are transactions that occur between entities in the group. They can be…
Q: KK Ltd regularly sells goods to its wholly-owned subsidiary company Ash Ltd, which it has owned…
A: Consolidated Financial Statement of the Company :— Consolidated financial statements are financial…
Q: When a company owns 50% or more of another company, accounting standards require that the owner…
A: Consolidated financial statements are prepared by those business entities which have various…
Q: Based on the information provided below, prepare appropriate consolidation journal entries for…
A: Goodwill: Goodwill is an intangible asset. It is defined as the excess of cost of an acquired…
Q: ABC Company has several subsidiaries that are included in its consolidated financial statements. In…
A:
Q: Which statement is incorrect concerning the preparation of consolidated financial statements? A.…
A: Solution Concept The financial statements of the parent and its subsidiaries shall be consolidated…
Q: Rivendell Corporation and Foster Company merged as of January 1, 2019. To effect the merger,…
A:
Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis.For each of the following independent scenarios in each of the independent parts:
(i)Prepare all the relevant
(ii)Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent.
(iii)Compareandcontrastthe accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries.
Scenario
(b) On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary. The Subsidiary recognised the interest as income whilst the Parent properly capitalised the interest paid as part of the cost of its construction work-in-progress in accordance with SFRS(I) 1- 23: Borrowing Costs.
Step by step
Solved in 2 steps
- Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. For each of the following independent scenarios in each of the independent parts: (1) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. Part A (a) On 20 December 20x1, a 90%-owned Subsidiary sold a piece of inventory which it bought for $200,000 to its Parent for $300,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $250,000 on this date. (b) On 20 December 20x1, a Parent…Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. (a) On 20 December 20x1, a 90%-owned Subsidiary sold a piece of inventory which it bought for $200,000 to its Parent for $300,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $250,000 on this date. (b) On 20 December 20x1, a Parent paid management fee of $200,000 to its 90%-owned Subsidiary. The Subsidiary recognised…Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. (c)On 20 December 20x1, a 70%owned Subsidiary sold a piece of inventory Z which it bought for $300,000 to its Parent for $200,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $190,000 on this date.
- Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. a)On 20 December 20x1, a 60%-owned Subsidiary paid rental of $200,000 to its Parent.The Parent recognised the rental as income whilst the Subsidiary company recognised the rental paid as an expense. The space area rented by the Subsidiary from the Parent comprises 2% of the building for which the Parent rented out to other external parties. In the separate financial statements of the Parent, the…Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. Scenario (b) On 20 December 20x1, a 60%-owned Subsidiary paid rental of $200,000 to its Parent.The Parent recognised the rental as income whilst the Subsidiary recognised the rental paid as an expense. The space area rented by the Subsidiary from the Parent comprises 98% of the building for which the Parent occupies the remaining 2% thereof. In the separate financial statements of the Parent, the…Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. (a) On 20 December 20x1, a Parent paid interest of $200,000 to its 80%-owned Subsidiary. The Subsidiary recognised the interest as income whilst the Parent recognised the interest paid as an expense.
- Assume that both the Parent and Subsidiary adopt 31 December as their financial year-end. Further assume that the transactions were conducted on cash basis. (i) Prepare all the relevant journal entries in the separate financial statements of the respective companies. (ii) Prepare all the relevant consolidation journal entries for the preparation of the consolidated financial statements of the Parent. (iii) Compare and contrast the accounting treatment/principles that you had applied in the independent scenarios in each part in preparing the journal entries and consolidation journal entries. (a) On 20 December 20x1, a 70%-owned Subsidiary sold a piece of inventory X which it bought for $200,000 to its Parent for $300,000. As at 31 December 20x1, that piece of inventory was still with the Parent and the net realisable value of the inventory was $250,000 on this date.IFRS 10 is an accounting standard that provides guidelines to consolidate financial statements for group companies. The following questions relate to a transaction between companies within a group where a sale of a non-depreciable asset occurred in the current year. (a) Describe the consolidation procedure that will be applied to account for the sale of an asset between the parent and subsidiary in the consolidated financial statements. (b) Discuss the effect of a profit and loss on sale on: (i) The consolidated statement of financial position (ii) The consolidated statement of profit or loss and other comprehensive Please note: Your answer should comply with the requirements of International Financial Reporting Standards (IFRS). Journals and preparation of financial statements are not required.Following the completion of a business combination in the form of a statutory consolidation, what is the balance in the new corporation’s Retained earnings account? A. The sum of the acquirer and acquiree retained earnings account balances. B. The acquirer retained earnings account balance C. Zero D. The acquiree retained earnings account balance
- a) Prepare the worksheet for preparing a consolidated statement of financial position on the date of acquisition. You may add accounts to the worksheet that may be necessary.b) Prepare a consolidated statement of financial position for Parker Company and subsidiary on January 2, 2020.Which of the following items would appear on the consolidated statement of financial position at the end of the firstfinancial year of the business combination?(i) Goodwill(ii) Equipment(iii) Loan from parent to subsidiary(iv) Investment in subsidiarySelect one:a.(i) and (ii) onlyb.(i), (ii), (iii) and (iv)c.(iii) and (iv) onlyd.(i), (ii) and (iv) only1. ABC Company has several subsidiaries that are included in its consolidated financial statements. In its December 31, year 1 trial balance. ABC had the following intercompany balances before eliminations: Determine intercompany receivables.