Explain how the matching principle supports the recognition of deferred income tax expense when a gain is recognized on the elimination of intercompany bond holdings.
Answer to relevant Questions“The realization of intercompany inventory and depreciable asset profits is really an adjustment made in the preparation of consolidated income statements to arrive at historical cost numbers.” Explain. “There should never be a gain on an intercompany sale of equipment when the selling company uses the revaluation model under IAS 16 and the equipment is sold at fair value.” Is this statement true or false? Explain. X Company owns 80% of Y Company and uses the equity method to account for its investment. On January 1, Year 2, the investment in Y Company account had a balance of $86,900, and Y Company's common shares and retained ...On January 1, Year 1, Handy Company (Handy) purchased 70% of the outstanding common shares of Dandy Limited (Dandy) for $7,000. On that date, Dandy’s shareholders’ equity consisted of common shares of $250 and retained ...On January 1, Year 1, Porter Inc. purchased 85% of the voting shares of Sloan Ltd. for $3,026,000 in cash. On this date, Sloan had common shares outstanding in the amount of $2,200,000 and retained earnings of $1,100,000. ...
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