CORPORATE REPORTING ASSIGNMENT On 1 January 2005 Upper Ltd acquired 60% of the shares in Lower Ltd for RM25,000 On that date the equity in Lower Ltd consisted of: Share capital RM15,000 Revaluation surplus RM3,000 General reserve RM5,000 Retained profits RM7,000 The directors of Upper Ltd believed the equity in Lower Ltd reflected the fair value of net assets with the exception of Land which was (and continues to be) carried at RM2,000 below its market value. Details of intragroup
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Chapter 7 Consolidated Financial Statements - Ownership Patterns and Income Taxes Chapter Outline I. Indirect subsidiary control A. Control of subsidiary companies within a business combination is often of an indirect nature; one subsidiary possesses the stock of another rather than the parent having direct ownership. 1. These ownership patterns may be developed specifically to enhance control or for organizational purposes. 2. Such ownership patterns may also result
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Question 1 Date | Account Name | Dr | Cr | 1-Apr-12 | No entry required until shares are allotted | | | | | | | 30-Apr-12 | Cash Trust | 1,700,000 | | | Application | | 1,700,000 | | | | | 5-May-12 | Application | 1,700,000 | | | Share Capital | | 1,500,000 | | Allotment | | 200,000 | | Cash at Bank | 1,700,000 | | | Cash Trust | | 1,700,000 | | | | | 8-May-12 | Cash at Bank | 550,000 | | | Allotment |
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CHAPTER 4 CONSOLIDATION OF WHOLLY OWNED SUBSIDIARIES ACQUIRED AT MORE THAN BOOK VALUE ANSWERS TO QUESTIONS Q4-1 The carrying value of the investment is reduced under equity method reporting when (a) a dividend is received from the investee, (b) a differential is amortized, (c) an impairment of goodwill occurs, and (d) the market value of the investment declines and is less than the carrying value and it is concluded the decline is other than temporary. Q4-2 A differential occurs when
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inter-company receivables/payables amounted to $40,300. In 2016, inter-company sales amounted to $123,960 with $35,330 of deferred profit remaining in ending inventory. Year-end inter-company receivables/payables amounted to $49,584. Financial statements of Parent and Subsidiary for the year ended December 31, 2016 are presented below. | Parent | Subsidiary | Sales Revenue | $ 9,864,000 | $3,718,800 | Cost of Goods Sold | (6,904,800) | (2,231,280) | Gross Profit |
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CHAPTER 2 CONSOLIDATION OF FINANCIAL INFORMATION Answers to Questions 1. A business combination is the process of forming a single economic entity by the uniting of two or more organizations under common ownership. The term also refers to the entity that results from this process. (1) A statutory merger is created whenever two or more companies come together to form a business combination and only one remains in existence as an identifiable entity. This arrangement is often instituted by the acquisition
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Chapter 5 Consolidated Financial Statements Intra-entity Asset Transactions Chapter Outline I. The transfer of assets between the companies forming a business combination is a common practice. The opportunity for such direct acquisition (especially of inventory) is often the underlying motive for the creation of the combination. II. Intra-entity inventory transfers A. The individual accounting systems of the two companies will record the transfer as a sale by one party and as a purchase
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Chapter 5 Consolidated Financial Statements Intra-entity Asset Transactions Chapter Outline I. The transfer of assets between the companies forming a business combination is a common practice. The opportunity for such direct acquisition (especially of inventory) is often the underlying motive for the creation of the combination. II. Intra-entity inventory transfers A. The individual accounting systems of the two companies will record the transfer as a sale by one party and as a purchase
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CORPORATE REPORTING ASSIGNMENTS Assignment 1: 20%. Due on 9 March 2013 Answer questions 4-33, 6-22, 19-22, 11-10 (Part a, c & d for lessee only) from Deegan, Australian Financial Accounting 6th Edition, McGraw-Hill, 2010 Assignment 2: 20%. Due on 23 March 2013 On 1 January 2005 Upper Ltd acquired 60% of the shares in Lower Ltd for RM25,000 On that date the equity in Lower Ltd consisted of: Share
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of the entity, often without owning any voting shares. C. An entity whose control rests with a primary beneficiary is addressed by FASB ASC subtopic 810-10 Variable Interest Entities. The following characteristics indicate a controlling financial interest in a variable interest entity. 1. The power, through voting rights or similar rights, to direct the activities of an entity that most significantly impact the entity’s economic performance. 2. The obligation to absorb
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