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Which of the following statements is true regarding inventory transfers between a parent and its subsidiary, using the initial value method?
a) The sale of merchandise between a parent and its subsidiary represents an arm's-length transaction and thus provides the basis for the recognition of profit on such transfers.
b) Profits on upstream transfers associated with the parent's ending inventory are subtracted from subsidiary net income for the current year in the calculation of parent's income from subsidiary. These year-end deferrals are then added to next year's subsidiary net income in the calculation of parent's income from subsidiary. This procedure is inappropriate because all the intra-entity transactions unsold at year-end may not be sold in the next year.
c) Profits on upstream transfers associated with the parent's ending inventory are subtracted from subsidiary net income for the current year in the calculation of parent's income from subsidiary. These year-end deferrals are then added to next year's subsidiary net income in the calculation of parent's income from subsidiary. This procedure is appropriate even if all the intra-entity transactions unsold at year-end may not be sold in the next year.
d) Merchandise transfers from a parent to its subsidiary that have not been sold to unaffiliated parties should be included in consolidated inventory at their transfer price.
e) Noncontrolling interest in subsidiary's net income should not be reduced for upstream or downstream ending inventory profits.
Meese Paper Distributors, Inc. has before-tax earnings of $1,900,000. Using the corporate tax table found in the text, calculate the amount of the total tax liability for Meese.
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In August, Gold Company sold 770 units of their only product. For the month, fixed costs were $10,400, variable costs were 57% of sales, and the average sales price was $62.
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On January 1, 2010, Garner Corporation purchased 25% of the common stock outstanding of Landon Corporation for $250,000. During 2010, Landon Corporation reported net income of $80,000 and paid cash dividends of $40,000.
What is Farr Company's accounts receivable balance at December 31, 2010?
Skipper, Inc., earns pretax book net income of $500,000 in 2011. Skipper acquires a depreciable asset in 2011, and first-year tax depreciation exceeds book depreciation by $80,000.
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Calculate the multifactor productivity composed of labor and capital units shipped plus finished goods for PCCorp. In place of fixed costs use (sales + finished goods)
Prepare journal entries for investments using the fair value and the equity method. How does it relate to the practice of accounting and its uses in business?
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