Questions from Financial Accounting

Q: What effect does a negative retained earnings balance on the subsidiary’s books

What effect does a negative retained earnings balance on the subsidiary’s books have on consolidation procedures?

Q: Unrealized profits from a prior-year upstream sale were realized in

Unrealized profits from a prior-year upstream sale were realized in the current period. What effect will this event have on income assigned to the noncontrolling interest in the consolidated income st...

Q: Par Company regularly purchases inventory from Eagle Company. Recently, Par

Par Company regularly purchases inventory from Eagle Company. Recently, Par Company purchased a majority of the voting shares of Eagle Company. How should Par Company treat inventory profits recorded...

Q: In the consolidation of a prior-period unrealized intercompany gain on

In the consolidation of a prior-period unrealized intercompany gain on depreciable assets, why does the debit to the Investment account decrease over time?

Q: What is an upstream sale? Which company may have unrealized profits

What is an upstream sale? Which company may have unrealized profits on its books in an upstream sale?

Q: Roof Corporation acquired 80 percent of the stock of Gable Company by

Roof Corporation acquired 80 percent of the stock of Gable Company by issuing shares of its common stock with a fair value of $192,000. At that time, the fair value of the noncontrolling interest was...

Q: Darwin Company holds assets with a fair value of $120,

Darwin Company holds assets with a fair value of $120,000 and a book value of $90,000 and liabilities with a book value and fair value of $25,000. Required Compute the following amounts if Brad Corp...

Q: How are unrealized profits on current-period intercompany sales treated in

How are unrealized profits on current-period intercompany sales treated in preparing the income statement for (a) the selling company and (b) the consolidated entity?

Q: How are unrealized intercompany profits treated in the consolidated statements if the

How are unrealized intercompany profits treated in the consolidated statements if the intercompany sale occurred in a prior period and the profits have not been realized by the end of the current peri...

Q: What is a downstream sale? Which company may have unrealized profits

What is a downstream sale? Which company may have unrealized profits on its books in a downstream sale?