2023110409

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School
Nipissing University **We aren't endorsed by this school
Course
ACCT 4866
Subject
Accounting
Date
Nov 4, 2023
Pages
1
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1. The Equity Method Income from Subsidiary account is __ debited____ in recording the journal entry to defer unrealized gross profit. 2. Camouflage Fashions Inc. owns 80% of Bubbles Apparels Corp.'s common shares. On January 1, 20X1, Bubbles Apparels sold land costing $200,000 to Camouflage Fashions for $250,000. The land had not yet been sold to a nonaffiliate as of December 31, 20X2. Which of the following is the consolidation entry associated with this intercompany transfer at the end of 20X2? Debit Investment in Bubbles for $40,000; Debit Non-controlling Interest in the Net Assets of Bubbles for $10,000; Credit Land for $50,000 3. In a(n) __ upstream____ intercompany fixed assets transfer, the gains or losses on the asset transfer accrue to the subsidiary company's shareholders. 4. Arsenic Holdings Corp., a consultancy conglomerate, recorded total consulting revenues of $600,000 during 20X1. The company provided consulting services of $150,000 to two of its subsidiaries. Which of the following is the consulting revenue that Arsenic Corp. would report in its consolidated income statement? Consolidated consultancy revenue = Total revenue received - Revenue received from affiliates = $600,000 - $150,000 = $450,000. 5. Commerce Cube Inc., transferred inventory costing $18,000 to its subsidiary, Tradi Inc., for $20,000. At the end of the financial year, Tradi still had $6,000 of this inventory on hand. Calculate the markup on sales. 2000/ 20000 Mark up on sales = (Total intercompany sales - Cost of goods sold) / Total intercompany sales = ($20,000 - $18,000) / $20,000 = $2,000 ÷ $20,000 = 10%. 6. Under the __COST____ method of accounting for investments, the parent company records dividends received from the subsidiary as income, but does not adjust unrealized profits arising out of intercompany transactions. 7. True or false: All sales revenue from intercompany transfers and the related cost of goods sold recorded by the transferring associate must be eliminated in the consolidation process. True
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