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Consolidated income statement

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A material realized gain on a subsidiary’s open-market acquisition of its parent company’s outstanding bonds at a discount is displayed in the consolidated income statement as: (Points : 1) An extraordinary item, net of income tax effects an ordinary item, gross of income tax effects either an extraordinary item or an ordinary item, net or gross of income tax effects, depending on the circumstances none of the foregoing. In the measurement of minority interest in net income of a partially owned subsidiary, the credit for Depreciation Expense¾Parent in the working paper elimination (in journal entry format) for intercompany gain in a depreciable plant asset is attributed to net income of: (Points : 1

The parent company the subsidiary the consolidated entity none of the foregoing. The realized but unrecognized gain on extinguishment of debt resulting from a parent company’s open-market acquisition of the subsidiary’s outstanding bonds is recorded in subsequent journal entries by: (Points : 1) The parent company for intercompany interest revenue the subsidiary for intercompany interest expense both a and b neither a nor b5. The gross profit on an intercompany sale of merchandise costing $500,000 at a gross margin rate of 16 2/3% based on selling price is: (Points : 1) $100,000$120,000$200,000$240,000Some other amount6. Which of the following is not included in a consolidated statement of cash flows? (Points : 1)

Acquisition by the parent company of additional shares of common stock directly from a subsidiary minority interest in net loss of a subsidiary acquisition by the parent company of additional shares of common stock from minority stockholders of a subsidiary cash dividends declared by a partially owned subsidiary to minority stockholders7. The starting point for the computation of net cash provided by operating activities in a consolidated statement of cash flows (indirect method) for a parent company and its partially owned subsidiary is: (Points : 1)

Consolidated net income combined net income, including minority interest in net income of subsidiary Parent company net income Intercompany investment income8. Included in a working paper elimination (in journal entry format) for intercompany sales of merchandise was a debit to Minority Interest in Net Assets of Subsidiary. This debit indicates that: (Points : 1)

The parent company sold merchandise to a partially owned subsidiary a wholly owned subsidiary sold merchandise to a partially owned subsidiary. A partially owned subsidiary sold merchandise to the parent company or to another subsidiary either a or b took place9. Included in a working paper elimination (in journal entry format) for intercompany sales was a credit of $60,000 to Cost of Goods Sold¾Subsidiary. The credit indicates that, for the accounting period involved: (Points : 1)

The unrealized intercompany profit in the subsidiary’s cost of goods sold was $60,000The realized intercompany profit in the subsidiary’s cost of goods sold was $60,000The cost of goods sold by the subsidiary to the parent company was $60,000The gross margin on intercompany sales was $60,000None of the foregoing was true10. In APB No. 51 “Consolidated Financial Statements,” the requirement for complete elimination of intercompany profit (gains) or losses is consistent with the: (Points : 1) Parent company concept of consolidated financial statements Equity method of accounting Economic unit concept of consolidated financial statements Cost method of accounting.

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