Parent uses the cost method. The following balances are known: 1/1/x1 Investment in Sub $8 1/1/x1...

Parent uses the cost method. The following balances are known:

1/1/x1 Investment in Sub $8

1/1/x1 Retained Earnings (Parent) $400

1/1/x1 Retained Earnings (Sub) $180

x1 Sub's Earnings $115

x1 Sub's Dividends Declared and Paid $61

What is the balance in "Investment in Sub" under cost on 12/31/x1?

What would be the balance in "Investment in Sub" on 1/1/x1 in Parent used the equity method?

What would be the balance in "Investment in Sub" on 12/31/x1 in Parent used the equity method?

Expert Solution

a)
1/1/x1 Investment in Sub	$ 8.00
Investment in Sub under cost on 12/31/x1	$ 8.00

b)
Investment in Sub on 1/1/x1 in Parent used the equity method	$ 8.00

c)
1/1/x1 Investment in Sub	$ 8.00
x1 Sub's Earnings	$ 115.00
x1 Sub's Dividends Declared and Paid	$ (61.00)
Investment in Sub underequityon 12/31/x1	$ 62.00

ekkarill92 answered 2 years ago

1. Given the following information: a. Parent sells Sub inventory with a cost of $45,000 for...

1. Given the following information: a. Parent sells Sub inventory with a cost of $45,000 for $55,000. Sub then sells this inventory to outsiders for $70,000. b. Parent sells Sub inventory with a cost of $15,000 for $20,000, which remains on hand in Sub’s ending inventory. a.Calculate unrealized profits . b.Pass eliminating entry in both the cases: 1.Parent sells to Sub and Sub to Outsider 2. Parent sells to Sub, but Sub not yet to Outsider c.How would it effect...

Advanced financial accounting: Given the following information:- 1-Parent sells Sub inventory with a cost of $45,000...

Advanced financial accounting: Given the following information:- 1-Parent sells Sub inventory with a cost of $45,000 for $55,000. Sub then sells this inventory to outsiders for $70,000. 2-Parent sells Sub inventory with a cost of $15,000 for $20,000, which remains on hand in Sub’s ending inventory. Calculate unrealized profits . a-Pass eliminating entry in both the cases: b-Parent sells to Sub and Sub to Outsider c- Parent sells to Sub, but Sub not yet to Outsider d-How would it effect Parents...

Parent purchased Subsidiary on January 1, 2019. The parent uses the equity method to account for...

Parent purchased Subsidiary on January 1, 2019. The parent uses the equity method to account for its investment in its subsidiary. The excess of investment cost over book value was allocated as follows: Equipment (20-year life) $400,000 Customer list (10-year life) 90,000 Patent (5-year life) 125,000 Goodwill 165,000 Total $780,000 Parent regularly sells merchandise to Subsidiary. In 2021, inter-company sales amounted to $60,100, with $18,000 of deferred profit remaining in ending inventory. Year-end inter-company receivables/payables amounted to $24,000. In 2022,...

1. During 2012, Parent sold inventory originally costing 60,000 to its 100% Sub for 75,000. Sub...

1. During 2012, Parent sold inventory originally costing 60,000 to its 100% Sub for 75,000. Sub sold all but 10,000 of the inventory purchased from Parent for 70,000 to external entities. What is the unrealized gross profit? 2.During 2012, Parent sold inventory originally costing 60,000 to its 100% Sub for 75,000. Sub sold all but 10,000 of the inventory purchased from Parent for 70,000 to external entities. What is the gross profit percent? 3.During 2012, Parent sold inventory originally costing...

Parent Z owns 75% of Sub QQQ. On January 1 2015, Parent Z issued 20 year...

Parent Z owns 75% of Sub QQQ. On January 1 2015, Parent Z issued 20 year notes, with face value $50,00,000,000 and a premium of 1,000,000. The premium is amortized at a rate of $50,000 per year. The debt was issued to a third party who resold it to Sub QQQ for $50,000,000 at the start of 2019. During 2019, Parent Z reported interest expense of $2,290,000 associated with this debt, and Sub QQQ reported interest income of $2,345,000 from...

1. The length of time required to recover the original cost of an investment is known...

1. The length of time required to recover the original cost of an investment is known as the investment's _____. a. recovery allotment period b. time-to-reimbursement c. payback period d. net present value 2. Which of the following capital budgeting techniques has experienced the greatest increase in usage by firms since the 1970s? a. Traditional payback period b. Internal rate of return c. Net present value d. Modified internal rate of return 3. Which of the following methods gives...

Problem 8-50 Prepare a Production Cost Report and Adjust Inventory Balances: Weighted-Average Method (LO 8-3, 4)...

Problem 8-50 Prepare a Production Cost Report and Adjust Inventory Balances: Weighted-Average Method (LO 8-3, 4) The records of Fremont Corporation’s initial and unaudited accounts show the following ending inventory balances, which must be adjusted to actual costs. Units Unaudited Costs Work-in-process inventory 215,000 $ 818,897 Finished goods inventory 26,000 366,250 As the auditor, you have learned the following information. Ending work-in-process inventory is 40 percent complete with respect to conversion costs. Materials are added at the beginning of the...

Bond Investment Transactions Starks Products uses the cost method to account for investments in bonds. Journalize...

Bond Investment Transactions Starks Products uses the cost method to account for investments in bonds. Journalize the entries to record the following selected bond investment transactions for Starks Products: If an amount box does not require an entry, leave it blank. a. Purchased for cash $150,000 of Iceline, Inc., 6% bonds at 100 plus accrued interest of $1,500. b. Received first semiannual interest payment. c. Sold $90,000 of the bonds at 102 plus accrued interest of $900.

Saleh Corporation is a 90%-owned subsidiary of Parent Corporation, acquired for $270,000 on 1/1/X5. Investment cost...

Saleh Corporation is a 90%-owned subsidiary of Parent Corporation, acquired for $270,000 on 1/1/X5. Investment cost was equal to book value and fair value. Saleh’s net income in 20X5 was $80,000, and Parent’s income, excluding its income from Saleh, was $90,000. Saleh’s income includes a $10,000 unrealized gain on land that cost $50,000 and was sold to Parent for $60,000. Assume that Saleh sold the land in 20X7. Parent adjusts for this transaction in the equity accounts. Required: 1. What...

question about accounting Parent Ltd acquired equity in Sub Ltd on 1 April 2006. At that...

question about accounting Parent Ltd acquired equity in Sub Ltd on 1 April 2006. At that date the equity of Sub Ltd comprised: Share capital $350 000 Retained earnings 250 000 Asset revaluation surplus (ARS) 110 000 The general ledger account balances for Sub Ltd and Parent Ltd, as at 31 March 2017, are provided in the consolidated worksheet is below. Additional information: (i) At the date of acquisition the identifiable net assets of Sub Ltd were considered to be...

Question