CHAPTER 13 investments and fair value accounting 1 DISCUSSION QUESTIONS 1. A business might invest in another company’s stock to earn dividends or in expectation of market price increases. In addition, a business may want to purchase another company outright for strategic reasons, such as (1) reducing costs, (2) replacing management, (3) expanding operations, or (4) integrating operations. 2. A gain or loss can occur when the fair value of the bond upon sale differs from the cost. The
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transfers. The investor and investee make reciprocal entries to defer and realize inventory profits. No adjustments are necessary. Acker Inc. bought 40% of Howell Co. on January 1, 2012 for $576,000. The equity method of accounting was used. The book value and fair value of the net assets of Howell on that date were $1,440,000. Acker began supplying inventory to Howell as follows: Howell reported net income of $100,000 in 2012 and $120,000 in 2013 while paying $40,000 in dividends each
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Accounting for Leases Source: Solutions Manual t/a Australian Financial Accounting 7/e by Craig Deegan 11.1 Within AASB 117 a lease is defined as: an agreement whereby the lessor conveys to the lessee in return for a payment or series of payments the right to use an asset for an agreed period of time. 11.2 We should capitalise a lease transaction (meaning that the leased asset and lease liability will be placed on the statement of financial position) when substantially all the risks and
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NOT FOR DISTRIBUTION TO STUDENTS Contains Assignment Questions and Suggested Solutions AT1 Accounting Theory & Contemporary Issues 2012 Printing Session 2 Suggested Solutions Level 4 Certified General Accountants Association of Canada 100 — 4200 North Fraser Way Burnaby, British Columbia Canada V5J 5K7 www.cga-canada.org © CGA-Canada, 2012 All rights reserved. These materials or parts thereof may not be reproduced or used in any manner without the prior written
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CHAPTER 1 INTERCORPORATE ACQUISITIONS AND INVESTMENTS IN OTHER ENTITIES ANSWERS TO QUESTIONS Q1-1 Complex organizational structures often result when companies do business in a complex business environment. New subsidiaries or other entities may be formed for purposes such as extending operations into foreign countries, seeking to protect existing assets
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The role of positive accounting theory. PAT has been the most significant accounting research agendas during the past four decades (Kabir). Before the arrival of PAT, normative accounting research had been the leading research tradition in accounting. Normative accounting theorists concentrated in developing accounting principles for recognition and measurement issues. In contrast with normative accounting theory which deals with “should” kind questions, PAT deals with “is” kind questions. According
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financial reporting issues related to the accounting for noncontrolling interests. This publication also includes interpretive guidance on consolidation procedure and on the presentation of combined, parentonly, and consolidating financial statements. The publication reflects our current understanding of the relevant guidance in these areas, based on our experience with financial statement preparers and related discussions with the FASB and SEC staffs. The accounting for noncontrolling interests is based
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Accounting for Leases under IFRS Lease classification A lease is an agreement between lessor and lessee, whereby the lessor passes to the lessee the right to use an asset for an agreed period of time in return for a payment or series of payments. Under IFRS IAS (17) Leases we recognize two types of leases, finance and operating: IAS 17, paragraph 8: “A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as
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Business Activities and Strategies of ANZ: Business Activities: ANZ Bank has its’ origin in Bank of Australasia, which was founded in 1835. It is the third largest bank in Australia, and the largest in New Zealand and Asia Pacific region. Currently, ANZ has its’ operations in 33 countries worldwide including the US and UK. With a network of around 800 branches it has a customer base of approximately six million. It is serving commercial, small businesses, retail and institutional customers with
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liabilities he is willing to assume .The Company buys stock in a company that have no liabilities left. If the price of an asset exceeds the aggregate tax, the buyer is given a price step-up basis in the assets so as it is the same to the purchase value. 2. Buying assets in a company, the buyer escapes from the problems presented by minor shareholders who refuse to sell the shares they own. 3. Buying a business through asset acquisition is easier and is not complicated from a perspective of
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