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A material realized gain on a subsidiary's open-market acquisition of its parent company's outstanding bonds at a discount is displayed in the...
2. A material realized gain on a subsidiary's open-market acquisition of its parent company's outstanding bonds at a discount is displayed in the consolidated income statement as: (Points : 1) An extraordinary item, net of income tax effectsAn ordinary item, gross of income tax effectsEither an extraordinary item or an ordinary item, net or gross of income tax effects, depending on the circumstancesNone of the foregoing3. In the measurement of minority interest in net income of a partially owned subsidiary, the credit for Depreciation Expense¾Parent in the working paper elimination (in journal entry format) for intercompany gain in a depreciable plant asset is attributed to net income of: (Points : 1) The parent companyThe subsidiaryThe consolidated entityNone of the foregoing4. The realized but unrecognized gain on extinguishment of debt resulting from a parent company's open-market acquisition of the subsidiary's outstanding bonds is recorded in subsequent journal entries by: (Points : 1) The parent company for intercompany interest revenueThe subsidiary for intercompany interest expenseBoth a and bNeither a nor b5. The gross profit on an intercompany sale of merchandise costing $500,000 at a gross margin rate of 16 2/3% based on selling price is: (Points : 1) $100,000$120,000$200,000$240,000Some other amount6. Which of the following is not included in a consolidated statement of cash flows? (Points : 1) Acquisition by the parent company of additional shares of common stock directly from a subsidiaryMinority interest in net loss of a subsidiaryAcquisition by the parent company of additional shares of common stock from minority stockholders of a subsidiaryCash dividends declared by a partially owned subsidiary to minority stockholders7. The starting point for the computation of net cash provided by operating activities in a consolidated statement of cash flows (indirect method) for a parent company and its partially owned subsidiary is: (Points : 1) Consolidated net incomeCombined net income, including minority interest in net income of subsidiaryParent company net incomeIntercompany investment income8. Included in a working paper elimination (in journal entry format) for intercompany sales of merchandise was a debit to Minority Interest in Net Assets of Subsidiary. This debit indicates that: (Points : 1) The parent company sold merchandise to a partially owned subsidiaryA wholly owned subsidiary sold merchandise to a partially owned subsidiaryA partially owned subsidiary sold merchandise to the parent company or to another subsidiaryEither a or b took place9. Included in a working paper elimination (in journal entry format) for intercompany sales was a credit of $60,000 to Cost of Goods Sold¾Subsidiary. The credit indicates that, for the accounting period involved: (Points : 1) The unrealized intercompany profit in the subsidiary's cost of goods sold was $60,000The realized intercompany profit in the subsidiary's cost of goods sold was $60,000The cost of goods sold by the subsidiary to the parent company was $60,000The gross margin on intercompany sales was $60,000None of the foregoing was true10. In APB No. 51 "Consolidated Financial Statements," the requirement for complete elimination of intercompany profit (gains) or losses is consistent with the: (Points : 1) Parent company concept of consolidated financial statementsEquity method of accountingEconomic unit concept of consolidated financial statementsCost method of accounting
