04) In the equity method of accounting for a subsidiary's operations, the parent company's share of the subsidiary's adjusted net income not distributed as dividends is credited in a closing entry to the following leger account: Select one: a. Intercompany Investment Income O b. Retained earnings of subsidiary c. Retained earnings O d. Investment in Subsidiary Common Stock

04) In the equity method of accounting for a subsidiary's operations, the parent company's share of the subsidiary's adjusted net income not distributed as dividends is credited in a closing entry to the following leger account: Select one: a. Intercompany Investment Income O b. Retained earnings of subsidiary c. Retained earnings O d. Investment in Subsidiary Common Stock

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Under the equity method of accounting for the operating results of a subsidiary, the dividends declared by the subsidiary to the parent company are accounted for by the parent company as A. Dividend revenue on the declaration date. B. A reduction of the Investment in Subsidiary account on the payment date. C. Dividend revenue on the payment date. D. A reduction of the Investment in Subsidiary account on the declaration date.
If the entity is using the equity method to account for investment in subsidiary, the entry to recognize dividends received from the subsidiary will: a.Be recognized in profit or loss b.Increase the carrying amount of investment c.Decrease the carrying amount of investment d.Be recognized in other comprehensive income
While going through the process of date alignment for Simple Equity method, how is the balance of Investment in subsidiary account calculated to return the account to its beginning of the year balance? Investment in Subsidiary + Subsidiary Income - Dividend's Declared (Subsidiary) Investment in Subsidiary - Subsidiary Income + Dividend's Declared (Subsidiary) Investment in Subsidiary - Dividend's Declared (Subsidiary) O Investment in Subsidiary + Subsidiary Income
During a fiscal year, the balance of a parent company's Investment in Subsidiary ledger account for a wholly owned subsidiary, for which the parent company uses the equity method of accounting, increases the amount of the sibsidiary's A. Adjusted net income. B. Dividends. C. Adjusted net income plus dividends. D. Undistributed earnings.
How is non-controlling interest in the subsidiary’s net assets presented in the consolidated statement of financial position? a. Within equity but separately from the equity of the owners of the parents. b. Within equity as part of retained earnings. c. Any of these as a matter of accounting policy choice. d. As a mezzanine item between liabilities and equity.
S1: Current fair value of the investment adjusted for dividends receiveddescribes the amount at which a parent company reports its investment in aSubsidiary under the cost method for periods subsequent to the businesscombination. S2: Under the cost method of accounting for investment,depreciation and amortization of the allocated difference between the fairvalues and book values of acquired subsidiary’s identifiable net assets is debitedto the Subsidiary’s expense accounts, in the working paper. A. Both statements are incorrectB. Only S2 is correctC. Only S1 is correctD. Both statements are correct
When a parent company uses the equity method to account for an investment in a subsidiary, why do both the parent’s Net Income and Retained Earnings account balances agree with the consolidated totals?
What is the correct method for treating a vesting differential linked to the acquisition of shares? privileged rights of the subsidiary by the parent company? Select an answer: a. It must be allocated to identifiable net assets or goodwill. b. It must be distributed in proportion to the identifiable assets and liabilities of the subsidiary. c. It must be charged to consolidated retained earnings or credited to contributed surplus. d. It must be taken care of in the current year.
S1: Current fair value of the investment adjusted for dividends received describes the amount at which a parent company reports its investment in a Subsidiary under the cost method for periods subsequent to the business combination. S2: Under the cost method of accounting for investment, depreciation and amortization of the allocated difference between the fair values and book values of acquired subsidiary’s identifiable net assets is debited to the Subsidiary’s expense accounts, in the working paper. Only S1 is correct Both statements are correct Both statements are incorrect Only S2 is correct
4. What method normally is used to account for the ownership of a subsidiary on the parent’s financial records? a Cost model/methodb. Equity methodc. Consolidationd. Either cost model/method or equity method
What is push-down accounting?a. A requirement that a subsidiary must use the same accounting principles as a parent company.b. Inventory transfers made from a parent company to a subsidiary.c. A subsidiary’s recording of the fair-value allocations as well as subsequent amortization.d. The adjustments required for consolidation when a parent has applied the equity method of accounting for internal reporting purposes.
1. Shares issued in connection with business combination are recorded at: A discount A premium Fair value Par value 2. Indirect costs related to acquisition of another entity is treated as An expense An investment account Share capital Share premium 3. The cost of registering equity securities in a business combination should be capitalized debited to share premium expensed