In 2016, Parent Company acquired 80 percent of the outstanding voting shares of Subsidiary Company, establishing control

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In 2016, Parent Company acquired 80 percent of the outstanding voting shares of Subsidiary Company, establishing control over the board of directors. Parent Company used the cost method of accounting for the investment during the year, but prepared consolidated financial statements at the end of the year. The consolidated financial statements are summarised below:

Cash Accounts receivable Inventory Property, plant and equipment Investments in Subsidiary Company Intangible

1. Explain the meaning of the accounts appearing on the consolidated balance sheet that do not appear on either of the unconsolidated balance sheets.
2. Certain accounts and amounts from the unconsolidated statement do not appear on the consolidated statements. Identify these amounts and accounts and explain why they are eliminated in the consolidation.
3. Accounts receivable and accounts payable on the unconsolidated statement do not total to the amount shown on the consolidated statements. What is the most likely reason for this?

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Financial Accounting An Integrated Approach

ISBN: 9780170349680

6th Edition

Authors: Ken Trotman, Michael Gibbins, Elizabeth Carson

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