At the Beginning of 2011,Parling Food Services Acquired a 90

question 35

Multiple Choice

At the beginning of 2011,Parling Food Services acquired a 90% interest in Simmons' Orchards when Simmons' book values of identifiable net assets equaled their fair values.On December 26,2011,Simmons declared dividends of $50,000,and the dividends were unpaid at year-end.Parling had not recorded the dividend receivable at December 31.A consolidated working paper entry is necessary to

• A)enter $50,000 dividends receivable in the consolidated balance sheet.
• B)enter $45,000 dividends receivable in the consolidated balance sheet.
• C)reduce the dividends payable account by $45,000 in the consolidated balance sheet.
• D)eliminate the dividend payable account from the consolidated balance sheet.

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Definitions:

Long-run Average Total Costs

The per-unit production cost when all factors of production are variable and optimized for scale.

Long-run Average Total Cost

The per-unit cost of production when all inputs, including those typically fixed, can be varied, showing economies of scale if downward sloping.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the average cost of production falls with increasing output.

Constant Returns to Scale

A situation in production where increasing the input of all resources by any proportion yields an increase in output by the same proportion.