What method normally is used to account for the ownership of a subsidiary on the parent’s financial records? a Cost model/method b. Equity method
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4. What method normally is used to account for the ownership of a subsidiary on the parent’s financial records?
a Cost model/method
b. Equity method
c. Consolidation
d. Either cost model/method or equity method
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- 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?Gain on Bargain Purchase treated as other income in a business combination should be: a. Credited to the income account of both acquirer and acquire b. Credited to the share premium account of the acquirer c. Credited to a deferred credit account d. Credited to the income account of the acquirerThe method of accounting for subsidiaries where investment income is limited to dividends received is the a. cost method. b. simple equity method. c. investment method. d. sophisticated equity method.
- The method of accounting for subsidiaries that better reflects the investment account on parent-only financial statements is the a. cost method. b. simple equity method. c. investment method. d. sophisticated equity method.Which of the following is a characteristic of the cost method of accounting for subsidiary operations? Select one: a. Parent company net income equals consolidated net income. b. More working paper eliminations are required than for the equity method of accounting. c. Consolidated amounts differ from the comparable amounts under the equity method of accounting. d. None of the aboveThe identifiable assets acquired and liabilities assumed in a business combination are generally measured at: a. Acquisition-date fair values b. Previous carrying amounts c. Fair value less cost to sell d. Cost
- Indirect costs related to acquisition of another entity is treated as An expense An investment account Share capital Share premium(TCO B) How are accounting for direct costs, indirect costs, and issuance costs reflected under the acquisition method of accounting for a business combination?Which item of the income statement represents the taxable income of the firm? EBIT Operating Income EBT CGS EAT
- When a parent company uses the equity method to account for an investment in a subsidiary, why do both the parent’s Net Income and Retained Earnings account balances agree with the consolidated totals?How 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.Which of the following is not considered in the determination of Total Assets after business determination? A. Book Value of the Acquirer's Total Assets B. Fair Value of the Acquiree's Total Assets C. Expenses that are actually paid in relation to business combination D. Contingent Consideration