Question: How does the parent company extension method modify the entity approach
How does the parent-company extension method modify the entity approach? What is the rationale for this modification?
Answer to relevant QuestionsExplain why a subsidiary’s assets and liabilities are consolidated using two different valuations (fair value and carrying value) under the parent-company method.At the date of acquisition, how is the amount of non-controlling interest measured under the entity method and the parent-company extension method, respectively?You, CA, are the senior in charge of an audit of Proctor Industries (PI), a public company in the business of selling plumbing parts wholesale. It is now November 3, 20X5—five weeks after PI’s year- end of September 30, ...On January 1, 20X5, Par Ltd. purchased 80% of the voting shares of Sub Ltd. for $ 906,400. The SFP of Sub Ltd. on that date was as follows:The accounts receivable, inventory, and current liabilities have “turned over” ...Company IR owns 30% of Company IE1 and 40% of Company IE2. IE1 sells inventory to IE2 at a profit of $ 20,000. All the goods are still in IE2’s inventory at year-end. By what amount should IR’s equity- basis investment ...
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