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modern advanced accounting
Advanced Accounting Concepts And Practice 9th Edition Arnold J. Pahler - Solutions
What is the financial position focus under the foreign currency unit of measure approach?
Is the translated amount for fixed assets historical cost under the foreign currency unit of measure approach?
What is the major shortcoming of the current rate method?
What is the effect of an exchange rate change called when the current rate method is used?
When the current rate method is used, how is the effect of an exchange rate change reported under FAS 52?
If the current rate method were used, how is the effect of an exchange rate change reported in a statement of comprehensive income?
What are the basic procedures required before the translation process begins?
What eventually happens to accumulated translation adjustments?
How are exchange rate change adjustments relating to a parent’s long-term receivables and payables reported? Why?
How are exchange rate change adjustments relating to a parent’s intercompany dividend re¬ ceivable reported?
Which exchange rate is used to calculate the amount of unrealized intercompany profit?
How are FX gains and losses on hedging a net asset position treated?
How does the Securities Exchange Act of 1934 differ from the Securities Act of 1933?
What purpose do the SEC’s Staff Accoi^nting Bulletins serve?
What purpose do SEC releases serve? |
What is the SEC’s role in the formation and improvement of generally accepted accounting principles?
How do a registration statement and a prospectus differ?
What is the distinction between Form S-1 and Form 10-K?
What do Regulations A and D have in common?
What do Forms 8-K, 10-K, and 10-Q have in common?
How is Regulation C under the 1933 Act similar to Regulation 12B under the 1934 Act?
What is the distinction between Regulation S-X and Regulation S-K}
How do a proxy and a proxy statement differ?
How are financial statements prepared in accordance with Regulation S-X requirements dif¬ferent from financial statements prepared in accordance with GAAP?
What accounts for intercompany transactions constituting such a high volume of domestic and international transactions?
How do intercompany transactions differ from intracompany transactions?
What are 10 examples of possible intercompany transactions}
How do upstream transfers and downstream transfers differ?
What benefit results from recording intercompany transactions in separately identifiable ac¬ counts}
Are intercompany transactions eliminated in consolidation because they are related-party transactions or because they are internal transactions, or both?
How must transfer prices for related-party transactions be set for U.S. income tax-reporting purposes?
How do inbound and outbound transactions differ?
Why is transfer pricing a hot topic for taxing authorities?
What is Section 482?
What are the IRS penalties for transfer pricing adjustments?
What are the consecfuences to the consolidated financial statements of using unsupportable transfer prices}
What is the pvimcity justification for eliminating intercompany transactions under current GAAP?
What is elimination by rearrajtgement} Is it required or optional?
Would a downstream inventory transfer at cost have to be eliminated if the subsidiary sold the inventory in the year of the transfer? Why or why not?
Consolidation Entries: Intercompany Loan & Interest Ply Inc. owns 100% of Stry Inc.’s common stock. On 11/1/06, Ply lent $100,000 to Stry. The loan is to be repaid on 1/30/07 along with$3,000 of interest. All aspects of the intercompany transaction were properly recorded by each company in its
Consolidation Entries: Intercompany Computer Charges Plo Inc. owns 100% of Stro Inc.’s com¬mon stock. Plo billed Stro $6,000 per quarter for computer services. The fourth quarter billing was unpaid at year-end. All aspects of the intercompany transaction were properly recorded by each company in
Consolidation Entries: Intercompany Operating Lease Prin Inc. owns 100% of Strin Inc.’s com¬mon stock. On 1/1/06, Strin leased manufacturing equipment from Prin under an operating lease requiring payments of $3,000 per month. Cash payments of $30,000 were made in 2006. All as¬pects of the
Consolidation Entries: Inventory Transfer at Cost In 2006, Parma Inc. sold inventory costing$40,000 to its 100%-owned subsidiary, Sarma Inc., for $40,000.Prepare the consolidation entry at the end of 2006, 2007, and 2008 relating to this intercompany inventory transfer under each of the following
Reconciling Intercompany Accounts The following entries are reflected in the intercompany ac¬counts of a parent and its subsidiary for June 2006:Parent's Intercompany Receivable/Payable 6/1 Balance .$50,000 6/4 Inventory sale . 17,000 10,000 . 6/3 Remittance 2,000 . 6/7 Collection of subsidiary's
Tax Effects of Different Transfer Prices During 2006, Perling Inc. sold inventory costing $100,000 to its 100%-owned British subsidiary. Sterling Inc., for $200,000. Sterling resold all of this inven¬tory locally in 2006 for 300,000 pounds. For simplicity, assume that during 2006 one pound
Consolidation Entries: Intercompany Patent License Fee Pota Inc. owns 100% of Sota Inc.’s com¬mon stock. In 2006 Pota licensed to Sota the right to use a manufacturing patent developed by Pota, the costs of which were expensed as research and development on Pota’s books. For each inventory
Consolidation Worksheet; Intercompany Software Use Charges Comparative financial statements for Puda Inc. and its 100%-owned subsidiary, Suda Inc., are as follows:Puda Inc.Cost Method®Equity Method'’Suda Inc.Income Statement (2006)Sales . . $ 400,000 $ 400,000 $ 225,000 Cost of sales . .
Auditing a Subsidiary’s Intercompany Receivable You are the audit senior (in charge of the field work) for a parent’s 100%-owned subsidiary that is a financial institution and issues its separate financial statements to regulatory authorities. The subsidiary has a very large intercompany
Suspicious Upstream Cash Transfers You are the outside (and presumably independent) auditor for a parent and its subsidiary. The parent is a publicly owned holding company that historically has paid for its executive payroll and other expenses using cash dividends received from the sub¬sidiary.
Making Parent-Company-Only Statements Articulate During 2006, Pero Inc. recorded $10,000 of intercompany royalty income. As of 12/31/06, its 100%-owned subsidiary, Sero Inc., which treats the intercompany royalty charge as an inventoriable cost, had charged $9,000 of the royalty cost to cost of
Accounting Theory: Substance of Over- and Underallocating Taxes Assume that Poxco and Soxco, Poxco’s 100%-owned subsidiary, file a consolidated income tax return. Poxco allocates in¬come tax expense to Soxco using a method that is inconsistent with FASB Statement of Financial Accounting Standard
Assessing a Newly Created Subsidiary’s Performance Data for Pola Inc., which operates a large re¬tail store, for the year ended 12/31/05 (its tenth year of business) follow:Operating income . $ 160,000 Interest expense . (40,000)Income before Income Taxes . 120,000 Income tax expense @ 40% .
For intercompany transfers at a markup, what concept of profit is used for consolidation elim¬ination purposes?
What does current GAAP require as to income taxes provided on intercompany profits}
Under current GAAP, can intercompany profit on downstream sales to a partially owned sub¬sidiary be realized to the extent of the noncontrolling interest}
How does complete elimination differ from fractional elimination}
When can intercompany profit on intercompany inventory transfers be reported for cotisolidated reporting purposes?
Why are intercompany inventory transfers usually recorded at amounts in excess of cost}
Does the GAAP requirement to defer 100% of the intercompany profit associated with intercom¬pany-acquired inventory fit under the economic unit concept or the parent company concept}Exercises
Unrealized Profit Determination A parent and its subsidiary had intercompany inventory transac¬tions in 2006 as follows:1. Complete the analysis.2. Prepare the inventory transfer elimination entry required in consolidation at the end of 2006.
Unrealized Profit Determination In 2006, a parent and its 100%-owned subsidiary had intercom¬pany inventory transactions. The following account balances pertain to this inventory transfer:Account Plax Inc. Strax Inc.Income Statement (2006)Sales Cost Intercompany Intercompany of.sales .sales cost
Reverse Analysis In consolidation at the end of 2006, Cost of Sales was credited fot $60,000 as a result of a posting from the inventory/COS change in basis elimination entry. During 2006 the sub¬sidiary sold 60% of the inventory it had acquired from the parent in 2006. The parent’s markup was
Reverse Analysis In consolidation at the end of 2006, Intercompany-Acquired Inventory was cred¬ited for $25,000 to change from the netv basis of accounting to the old basis of accounting. Duting 2006, the subsidiary charged its Cost of Sales $400,000 as a result of having sold
Realized Profit Calculation — Two Years of Downstream Transfers In 2007, Soxa Inc., a 100%-owned subsidiary of Poxa Inc., resold for $90,000 inventory it had purchased in 2006 for $70,000 from Poxa. Poxa’s cost was $40,000. Also in 2006, Poxa sold inventory costing $250,000 to Soxa for
Realized Profit Calculation — Two Years of Upstream Transfers In 2007, Perl Inc. resold for$85,000 inventory it had purchased in 2006 for $60,000 from Seri Inc., its 60%-owned subsidiary.Seri’s cost was $40,000. Also in 2007, Perl purchased for $600,000 inventory costing Seri$450,000. At the
Calculating Consolidated Sales and Cost of Sales During 2006, Pyra Inc. sold inventory costing$150,000 to Syra Inc., its 100%-owned subsidiary, at the same mark-up percentage as sales to third parties. As of 12/31/06, Syra had resold 90% of this inventory. Information regarding total sales for both
Calculating Consolidated Sales and Cost of Sales During 2006, Sora Inc., an 80%-owned sub¬sidiary, sold inventory costing $420,000 to Pora Inc., its parent, at the same mark-up percentage as sales to third parties. As of 12/31/06, Pora reported $90,000 in its balance sheet for intercompanyacquired
Multiple-Year Elimination Entries — Downstream Sales In 2006, Pobe Inc. sold inventory cost¬ing $50,000 to its 75%-owned subsidiary, Sobe Inc., for $70,000. Sobe resold a portion of this inventory for $65,000 in 2006. At the end of 2006, Sobe’s balance sheet showed $21,000 of
Calculating the NCI Deduction — Downstream Transfers In 2006, Pebb Inc. sold inventory cost¬ing $200,000 to its 90%-owned subsidiary, Sebb Inc., for $250,000. At the end of 2006, Sebb re¬ported $30,000 of this inventory in its balance sheet. Sebb also reported net income of $100,000 for
Calculating the NCI Deduction — Upstream Transfers In 2006, Sote Inc., an 80%-owned sub¬sidiary of Pote Inc., sold inventory costing $300,000 to Pote for $400,000. Pote resold $340,000 of this inventory in 2006 for $5 10,000. Sote also reported net income of $200,000 for 2006, dis¬regarding any
Multiple- Year Elimination Entries — Upstream Sales In 2006, Pota Inc. acquired inventory from Sota Inc., its 75%-owned subsidiary, for $100,000. Sota’s cost was $80,000: Pota resold a portion of this inventory in 2006 for $90,000. At 12/31/06, Pota’s balance sheet showed $40,000 of
Issuing PCO Statements Selected items from the financial statements of Poly Inc. and Soly Inc., a 70%-owned subsidiary of Poly, at 12/31/06, are as follows:Poly Inc. Soly Inc.Income Statement Sales Cost of.sales .Intercompany sales .Intercompany cost of sales .Net income .Statement of Retained
Lower-of-Cost-or-Market Adjustment In 2006, Pondo Inc. sold inventory costing $60,000 to its subsidiary for $70,000. At the end of 2006, the subsidiary recorded a lower-of- cost-or-market ad¬justment relating to this inventory, 60% of which had been sold during 2006.Determine the amount at which
Consolidation Worksheet: Downstream Transfers — 100% Ownership In 2005, Peta Inc. created a 100%-owned subsidiary. Seta Inc. In 2006, intercompany inventory transfers occurred for the first time. Comparative financial statements are as follows:Required 1. Determine the unrealized profit at
Consolidation Worksheet: Upstream Transfers — 90% Ownership In 2005, Pino Inc. created a 90%-owned subsidiary, Sino Inc. In 2006, intercompany inventory transfers occurred for the first time. Comparative financial statements are as follows:Income Statement (2006)Sales Cost Expenses
Consolidation Entries: 100% Ownership — Downstream Transfers; Other Intercompany Transac¬tions On 1/1/06, Pom Inc. created a 100%-owned subsidiary, Som Inc., with a $25,000 common stock investment.Additional Information 1. During 2006, Pom sold inventory to Som at a profit. The markup percentage
Consolidation Worksheet: Downstream Multiple-Year Transfers — 100% Ownership Compara¬tive financial statements of Puma Inc. and its 100%-owned subsidiary, Suma Inc. (created five years ago), are as follows:Puma Inc. Suma Inc.Income Statement (2006)Sales Cost Expenses of.sales..Intercompany
Consolidation Worksheet: Upstream Multiple- Year Transfers — 80% Ownership Comparative fi¬nancial statements of Pebb Inc. and its 80%-owned subsidiary, Sebb Inc. (created five years ago), are as follows:Pebb Inc. Sebb Inc.Income Statement (2006)Sales Cost Expenses of.sales..Intercompany Accounts
Consolidation Entries: 100% Ownership — Two Years of Downstream Transfers; Other Intercom¬pany Transactions; LCM Adjustment On 1/1/06, Pano Inc. created a 100%-owned subsidiary, Sano Inc., with a $40,000 common stock investment.Additional Information 1. During 2006, Pano sold inventory costing
Spreadsheet Automation of the Unrealized Profit ^Analysis and the Inventory Transfer Elimination Entry Before working this assignment, you should first have worked Problems 9-1, 9-2, 9-4, or 9-5 using MODEL09 of the software package that accompanies the text. Next perform the follow¬ing steps for
If Better Off Economically, Why Not Report It? In late 2006, Pia Inc. sold inventory costing$60,000 to its 60%-owned subsidiary, Sia Inc., for $100,000 with payment being made on deliv¬ery. As of 12/31/06, Sia had not resold any of this inventory.Required 1. Does the fact that Pia was paid in full
Sole versus Shared Control: Does It Really Matter? (Research Assignment) Alpha Inc. and Beta Inc. are co-owners (50% owners) of a joint venture, Ventura Inc., created in early 2006 to build and market a newly conceived product. Neither company has control of the joint venture; all im¬portant
Interpersonal Skills: Looking Back? Work environments vary greatly. >Required No matter where you will have worked in life, which one thing — usually above all other things —1 will (1) you always remember about where you worked and (2) your co-workers always rememS ber about you?
What is the essence of the purchase method of accounting.
What ing? two basic questions must be answered with respect to the purchase method of accounting?
What types of consideration can the acquiring entity give in a business combination?
When is it preferable in recording a business combination to use the fair value of the equity securities issued instead of the current value of the net assets of the acquired business?
How should direct costs incurred in a business combination be treated?
What is contingent consideration, and how should it be accounted for?
In which situations would only one major conceptual element exist? In which situation would only two major conceptual elements exist?
What is the purpose of separating the cost of the investment into the individual components of the major conceptual elements?
Why is there no separate account for goodwill on the parent company’s books under non¬push-down accounting^
If the acquiring entity’s cost equals or is more than the target company’s net assets at book value, can it be said that the acquirer purchased the target’s retained earnings?
Under non-push-down accounting, why are the subsidiary’s reported amounts deemed not rel¬ evant?
What are the two criteria for recognizing an acquired entity’s intangible assets?
How are limited-life intangible assets other than goodwill subsequently accounted for?
How are indefinite-life intangible assets other than goodwill subsequently accounted for?
How is goodwill determined?
How is goodwill accounted for in subsequent periods?
How is goodivill reported in the financial statements?
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