Questions from Advanced Accounting

Q: A firm issues mandatorily redeemable preferred stock. Should this be classified

A firm issues mandatorily redeemable preferred stock. Should this be classified as debt or equity in the consolidated financial statements?

Q: What reciprocal accounts arise when one company borrows from an affiliate?

What reciprocal accounts arise when one company borrows from an affiliate?

Q: If a parent reports interest expense of $4,300 with

If a parent reports interest expense of $4,300 with respect to bonds held intercompany and the subsidiary reports interest income of $4,500 for the same bonds: (a) Was there a constructive gain or los...

Q: Do direct lending and borrowing transactions between affiliates give rise to unrealized

Do direct lending and borrowing transactions between affiliates give rise to unrealized gains or losses and unrecognized gains or losses?

Q: What are constructive gains and losses? Describe a transaction having a

What are constructive gains and losses? Describe a transaction having a constructive gain.

Q: Pop Corporation acquired 70 percent of the outstanding voting stock of Son

Pop Corporation acquired 70 percent of the outstanding voting stock of Son Corporation for $182,000 cash on January 1, 2016, when Son’s stockholders’ equity was $26...

Q: A company has a $1,000,000 bond issue

A company has a $1,000,000 bond issue outstanding with unamortized premium of $10,000 and unamortized issuance cost of $5,300. What is the book value of its liability? If an affiliate purchases half t...

Q: Compare a constructive gain on intercompany bonds with an unrealized gain on

Compare a constructive gain on intercompany bonds with an unrealized gain on the intercompany sale of land.

Q: Describe the process by which constructive gains on intercompany bonds are realized

Describe the process by which constructive gains on intercompany bonds are realized and recognized on the books of the affiliates. Does recognition of a constructive gain in consolidated financial sta...

Q: If a subsidiary purchases parent bonds at a price in excess of

If a subsidiary purchases parent bonds at a price in excess of recorded book value, is the gain or loss attributed to the parent or the subsidiary? Explain.