On January 1,2008,Parent Company Acquired 90 Percent Ownership of Subsidiary

question 10

Multiple Choice

On January 1,2008,Parent Company acquired 90 percent ownership of Subsidiary Corporation,at underlying book value.The fair value of the noncontrolling interest at the date of acquisition was equal to 10 percent of the book value of Subsidiary Corporation.On Mar 17,2008,Subsidiary purchased inventory from Parent for $90,000.Subsidiary sold the entire inventory to an unaffiliated company for $120,000 on November 21,2008.Parent had produced the inventory sold to Subsidiary for $62,000.The companies had no other transactions during 2008.
-Based on the information given above,what amount of sales will be reported in the 2008 consolidated income statement?

• A)$62,000
• B)$120,000
• C)$90,000
• D)$58,000

Grasp the implications of capacity decisions on the profitability and operational efficiency of organizations.

Understand the principles of net present value and its application in evaluating investment decisions.

Grasp the concept of break-even analysis and its limitations.

Understand strategies for managing and improving throughput, including dealing with bottlenecks.

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Definitions:

Indirect Method

A way to report cash flows from operating activities by starting with net income and adjusting for non-cash transactions.

Common Shares

Shares of ownership in a corporation that grant holders voting rights and a residual claim on the corporation's assets and earnings.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, including issuing debt, selling stock, or paying dividends.

Issue of Shares

Refers to the process by which a corporation issues new shares of stock to raise capital, often to expand or to undertake new projects.