I. Intercompany transfer of inventory at cost need not be eliminated in consolidation. II. Downstream intercompany transfer of inventory to a 100%-owned subsidiary need not be eliminated in consolidation. Both statements are false. Both statements are true. Statement I is true; Statement II is false. Statement I is false; Statement II is true.

I. Intercompany transfer of inventory at cost need not be eliminated in consolidation. II. Downstream intercompany transfer of inventory to a 100%-owned subsidiary need not be eliminated in consolidation. Both statements are false. Both statements are true. Statement I is true; Statement II is false. Statement I is false; Statement II is true.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 13DQ

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Statement 1: Consolidated operating expenses will not be affected, in anycapacity, by an intercompany sale ofland.Statement 2: Consolidated operating expenses will not be affected, in anycapacity, by an intercompany sale ofmerchandise a.Only statement 2 is trueb.Both Falsec.Both Trued.Only statement 1 is true
1.If Company Abee holds consigned goods from Company XyXy, which statement is true? Group of answer choices Neither company will report the consigned inventory as their asset. Both companies will report the consigned inventory as their asset. Company XyXy will report the consigned inventory as their asset. Company Abee will report the consigned inventory as their asset. 2. Inventory that is in transit between the supplier and purchaser should: Group of answer choices not be included in either party's inventory balance. be recorded as inventory by whichever party has paid for the transportation costs as dictated by the FOB terms. be included in the supplier's inventory balance always. be included in the purchaser's inventory balance always. 3. If costs are rising, which inventory costing method will result in the highest ending inventory balance for the period? Group of answer choices Specific identification LIFO FIFO Weighted average 4. If costs are rising, which…
Statement 1: Consolidated operating expenses will not be affected, in any capacity, by an intercompany sale of land. Statement 2: Consolidated operating expenses will not be affected, in any capacity, by an intercompany sale of merchandise Choices A. Both is true B. Both is false C. Only statement 1 is true D. Only statement 2 is true
1. Which of the following are prohibited when accounting for inventory under U.S. GAAP? a. FIFO method b. Average cost method c. Recovery of written down inventory d. LIFO method 2. Under IFRS GAAP research costs and development costs (when product technologically and economically feasible) are a. both capitalized b. both expensed c. research costs are expensed and development costs are capitalized d. research costs are capitalized and development costs are expensed
Which of the following statements is correct? Statement 1: Any unrealized profit or loss made by the subsidiary should be eliminated from its profit. Statement 2: only the group portion of any unrealized profit need to be eliminated.
Explain why consolidated entities defer intra-entity gross profit in ending inventory and the consolidation procedures required subsequently to recognize profits.
Which of the following accounting treatments for costs related to business combination is incorrect? Group of answer choices a. Acquisition related costs such as finder’s fees; advisory, legal, accounting, valuation and other professional and consulting fees; and general administrative costs, including the costs of maintain an internal acquisitions department shall be recognized as expense in the Profit/Loss in the periods in which the costs are incurred. b. The costs related to issuance of financial liability at fair value through profit or loss shall be recognized as expense while those related to issuance of financial liability at amortized cost shall be recognized as deduction from the book value of financial liability or treated as discount on financial liability to be amortized using effective interest method. c. The costs related to the organization of the newly formed corporation also known as pre-incorporation costs shall be capitalized as goodwill or deduction from…
How would the answer to problem (5) have been affected if the parent had applied the initial value method rather than the equity method?a. No effect: The method the parent uses is for internal reporting purposes only and has no impact on consolidated totals.b. The consolidated Equipment account would have a higher reported balance.c. The consolidated Equipment account would have a lower reported balance.d. The balance in the consolidated Equipment account cannot be determined for the initial value method using the information given.
Statement 1: It is not always necessary to identify both fair value less cost to sell and value in use. Only when fair value less cost to sell is not greater than the carrying amount, then value in use calculation is required. Statement 2: IAS 36 is not applicable to financial assets, particularly those that are classified as investments in subsidiaries, joint ventures and associates. Only Statement 1 is correct. Only Statement 2 is correct. Both statements are correct. Both statements are incorrect.
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