In the Year an 80% Owned Subsidiary Sells Equipment to Its

question 16

Multiple Choice

In the year an 80% owned subsidiary sells equipment to its parent company at a gain, the noncontrolling interest in consolidated income is calculated by multiplying the noncontrolling interest percentage by the subsidiary's reported net income:

• A) plus the intercompany gain considered realized in the current period.
• B) plus the net amount of unrealized gain on the intercompany sale.
• C) minus the net amount of unrealized gain on the intercompany sale.
• D) minus the intercompany gain considered realized in the current period.

Prepare a schedule of accounts receivable and payable and understand its importance in financial reporting.

Discuss the concept and calculation of segment return on assets and its significance for profitability analysis.

Illustrate the adjustment and correction processes in the event of errors in the accounting records.

Explain the role and significance of subsidiary ledgers and their relationship with the general ledger.

---

Definitions:

Customer Preferences

Individual tastes or choices of consumers that influence their purchasing behavior.

Strategic Customer Relationships

Building and maintaining long-term interactions with customers to understand their needs better and create mutual value over time.

Potential Buyer

An individual or organization that has shown interest in a product or service and has the potential to make a purchase.

Consultative Selling

Consultative selling is a sales approach that focuses on building relationships with customers, understanding their needs, and providing solutions that meet those needs.