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Learning Objective: Demonstrate the consolidation procedures to eliminate all intra-entity debt accounts and recognize any associated gain or loss created whenever one company acquires an affiliates debt instrument from an outside party.
Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton.
On January 1, 2011, Hamilton sold $1,100,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 8 percent payable every December 31. Cairns acquired 45 percent of these bonds at 92 percent of face value on January 1, 2013. Both companies utilize the straight-line method of amortization.
Prepare the consolidation worksheet entries to recognize the effects of the intra-entity bonds at each of the following dates. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Outdoor Gear is purchasing equipment costing $1.2 million that will lower manufacturing costs by $280,000 a year. The equipment will be depreciated over years using straight-line depreciation to a book value of zero. After 7 years, the equipment will..
inventory method reports the most up-to-date cost on the balance sheet
Discuss significant differences between IFRS and GAAP. Identify which you prefer and state why. The convergence process is likely to lead to the acceptance of the IFRS approach. Explain whether or not you agree with this decision.
Determine the appropriate amounts to complete the following schedule. Show computations, and round to the nearest dollar.
Compute the break-even sales (units) under the proposed program. Determine the maximum income from operations possible with the expanded plant.
On December 31, there were 26 units remaining in ending inventory. Using the LIFO inventory valuation method, what is the cost of the ending inventory?
What three things do high-performing organizations never do? What metrics can an IT auditor use to assess how an organization is performing in terms of change controls and change management? Why are those metrics particularly useful?
Selk Steel Co., which began operations on January 4, 2013, had the following subsequent transactions and events in its long- term investments. Selk purchased 60,000 shares (20% of total) of Kildaire’s common stock for $1,560,000.
How much income must Sue report if she selects the lump sum settlement. How much income must Sue report if she choose the annuity
What is the payback period of the project. What is the profitability index of the project. What is the IRR of the project? What is the NPV of the project. How sensitive is the NPV to changes in the price of the new smart phone. How sensitive is the N..
Early in the current year, Keith meets Dan through a business associate. Dan tells Keith that he is directing a business venture that purchases poorly managed restaurants in order to turn them around and make them profitable. Dan mentions that he is ..
Dolphin Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2013 for $8,000,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2014, new technology was introdu..
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