Questions from Financial Accounting

Q: Porter Company purchased 60 percent ownership of Service Corporation on January 1

Porter Company purchased 60 percent ownership of Service Corporation on January 1, 20X1, at underlying book value. At that date, the fair value of the non controlling interest was equal to 40 percent...

Q: Distinguish between an upstream sale of inventory and a downstream sale.

Distinguish between an upstream sale of inventory and a downstream sale. Why is it important to know whether a sale is upstream or downstream?

Q: How does carrying securities at fair value differ from the equity method

How does carrying securities at fair value differ from the equity method in reporting income from non subsidiary investments?

Q: Describe an investor’s treatment of an investment in common stock that was

Describe an investor’s treatment of an investment in common stock that was previously carried at fair value, if the investment becomes qualified for use of the equity method by an increase in the leve...

Q: Pepper Corporation owns 70 percent of Salt Company’s stock. In the

Pepper Corporation owns 70 percent of Salt Company’s stock. In the 20X9 consolidated income statement, the non controlling interest was assigned $18,000 of income. There was no differential in the acq...

Q: Stick Company reports net assets with a book value and fair value

Stick Company reports net assets with a book value and fair value of $200,000. Paste Corporation acquires 75 percent ownership for $150,000. Paste reports net assets with a book value of $520,000 and...

Q: Paint Corporation acquired 80 percent of the stock of Stain Company by

Paint Corporation acquired 80 percent of the stock of Stain Company by issuing shares of its common stock with a fair value of $192,000. At that time, the fair value of the non controlling interest wa...

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

Summer 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 Parade Co...

Q: How is the receipt of a dividend recorded under the equity method

How is the receipt of a dividend recorded under the equity method? When investments are carried at fair value?

Q: Planter Corporation used debentures with a par value of $625,

Planter Corporation used debentures with a par value of $625,000 to acquire 100 percent of Sorden Company’s net assets on January 1, 20X2. On that date, the fair value of the bonds i...