The Purchase by a Subsidiary of Some of Its Shares

question 14

Multiple Choice

The purchase by a subsidiary of some of its shares from noncontrolling stockholders results in the parent company's share of the subsidiary's net assets:

• A) increasing.
• B) decreasing.
• C) remaining unchanged.
• D) increasing, decreasing, or remaining unchanged.

Understand the flow of costs in manufacturing accounts and how they affect financial statements.

Recognize the role of time tickets and machine hours in attributing costs to jobs.

Understand the treatment of underapplied or overapplied overhead in financial records.

Understand and apply the concept of predetermined overhead rates in the calculation of applied manufacturing overhead.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of a company's receivables that may ultimately not be collected.

Net Realizable Value

The estimated selling price of goods, minus the costs of their sale or disposal.

Write Off

The process of recognizing that a portion of a company's assets has become worthless and expensing them to the income statement.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the operating cycle of a business, whichever is longer.