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For Each of the Following Situations, Select the Correct Entry

Question 127

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For each of the following situations, select the correct entry that would be required on a consolidation worksheet.

Premises:
Eliminate recorded amortization of acquisition fair value over book value, recorded under the equity method.
Eliminate income from subsidiary, recorded under the equity method.
Upstream beginning inventory profit, using the initial value method.
Upstream transfer of depreciable assets, in the period after transfer, where subsidiary recognizes a gain, using the initial value method.
Downstream beginning inventory profit, using the initial value method.
Downstream ending inventory profit, using the initial value method.
Upstream transfer of land, in the period after transfer, where subsidiary recognizes a loss, using the initial value method.
Upstream ending inventory profit, using the initial value method.
Downstream transfer of land, in the period after transfer, where parent recognizes a loss, using the initial value method.
Downstream transfer of depreciable assets, in the period after transfer, where parent recognizes a gain, using the initial value method.
Responses:
Credit investment in subsidiary.
Debit retained earnings.
Credit retained earnings.
None of the above.
Debit investment in subsidiary.

Correct Answer:

Eliminate recorded amortization of acquisition fair value over book value, recorded under the equity method.
Eliminate income from subsidiary, recorded under the equity method.
Upstream beginning inventory profit, using the initial value method.
Upstream transfer of depreciable assets, in the period after transfer, where subsidiary recognizes a gain, using the initial value method.
Downstream beginning inventory profit, using the initial value method.
Downstream ending inventory profit, using the initial value method.
Upstream transfer of land, in the period after transfer, where subsidiary recognizes a loss, using the initial value method.
Upstream ending inventory profit, using the initial value method.
Downstream transfer of land, in the period after transfer, where parent recognizes a loss, using the initial value method.
Downstream transfer of depreciable assets, in the period after transfer, where parent recognizes a gain, using the initial value method.
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