What difference does it make on the consolidated financial statements if there are unrealized profits in land resulting from a downstream transaction as compared with an upstream transaction?
Answer to relevant QuestionsWhen there are unrealized profits in inventory at the end of Year 1, consolidated profit would normally be affected for Years 1 and 2. Explain. “From a consolidated-entity point of view, intercompany revenue and expenses and intercompany borrowings do nothing more than transfer cash from one bank account to another.” Explain. In the course of the audit of King Limited (King), you, the CA, while reviewing the draft financial statements for the year ended August 31, Year 17, noticed that King’s investment in Queen Limited (Queen) was measured on ...On January 2, Year 1, Road Ltd. acquired 70% of the outstanding voting shares of Runner Ltd. The acquisition differential of $280,000 on that date was allocated in the following manner: ...On January 1, Year 3, the Most Company purchased 80% of the outstanding voting shares of the Least Company for $1.6 million in cash. On that date, Least’s balance sheet and the fair values of its identifiable assets and ...
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