For Each of the Following Situations, Select the Best Answer

question 52

Essay

For each of the following situations, select the best answer that applies to consolidating financial information subsequent to the acquisition date:
(A) Initial value method.
(B) Partial equity method.
(C) Equity method.
(D) Initial value method and partial equity method but not equity method.
(E) Partial equity method and equity method but not initial value method.
(F) Initial value method, partial equity method, and equity method.
_____1.Method(s) available to the parent for internal record-keeping.
_____2.Easiest internal record-keeping method to apply.
_____3.Income of the subsidiary is recorded by the parent when earned.
_____4.Designed to create a parallel between the parent's investment accounts and changes in
the underlying equity of the acquired company.
_____5.For years subsequent to acquisition, requires the *C entry.
_____6.Uses the cash basis for income recognition.
_____7.Investment account remains at initially recorded amount.
_____8.Dividends received by the parent from the subsidiary reduce the parent's investment
account.
_____9.Often referred to in accounting as a single-line consolidation.
_____10.Increases the investment account for subsidiary earnings, but does not decrease the
subsidiary account for equity adjustments such as amortizations.

Calculate account balances given transaction data.

Understand the recording and impact of dividends on financial statements.

Prepare comprehensive journal entries for accumulated transactions.

Understand the differences between financial accounting and managerial accounting.

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Definitions:

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale, often leading to the interconnectedness of world economies and cultures.

Corporations

Legal entities that are distinct from their owners, providing them with limited liability, and are created to conduct business.

Oligopoly

A market structure in which a few firms dominate the industry, leading to limited competition and potentially higher prices for consumers.

Deskilling Thesis

The argument that technological advancements lead to a reduction in the skill levels required for certain jobs.