Question

Can someone tell me the correct answers of this questions?

1) A arm's length transaction, which would be reflected in the consolidated financial statements, would include:

a-A loan to the president of the subsidiary company- Incorrect

b-The purchase of material from a supplier abroad

c-The sale of fixed assets that are no longer needed to the subsidiary- Incorrect

d-Sales of inventory to a subsidiary

2) When a partner withdraws from a partnership and the remaining partners acquire that interest:

a) This may have an effect on the liquidity of the partnership

b) This will increase the cash flow into the partnership

c) This will always create goodwill for an amount equal to the withdrawing partner’s original interest in the partnership- Incorrect

d) This will cause all assets to be written down to offset the acquisition cost of the withdrawing partner’s interest at the time of the withdraw- Incorrect

3) The consolidation process is carried out:

a) Every year since the entries are registered only by the parent company- Incorrect

b) Every year since the tickets are only registered by the subsidiary company

c) Every year since the tickets are registered by both, the parent company and the subsidiary- Incorrect

d) Each year since the tickets are not registered by the parent or subsidiary

4) In a global liquidation of a company:

a) All assets are paid to partners based on their initial contribution, with the oldest association paid first- Incorrect

b) All assets are paid to the partners on the basis of equal distribution, regardless of when the member was admitted to the association

c) All assets must be made before any distribution can be made

d) All assets are paid to the partners, at the same time, it is based on fair market value at the time they were initially donated to the association- Incorrect

Answer 1

The following are the answers to the following questions:

1.A arm's length transaction, which would be reflected in the consolidated financial statements, would include:

a A loan to the president of the subsidiary company as all the three will be treated as related parties and eliminated in consolidation.

2.When a partner withdraws from a partnership and the remaining partners acquire that interest:

c.This will always create goodwill for an amount equal to the withdrawing partner’s original interest in the partnership this is the correct answer which is showing as incorrect.

3.The consolidation process is carried out:

Every year since the tickets are registered by both, the parent company and the subsidiary which is the correct answer since

consolidation process is carried out fully at the date of acquisition to bring together all accounts into a single set of financial records. In other combinations, the companies retain their identities as separate enterprises and continue to maintain their own separate accounting systems. For these cases, consolidation is a periodic process necessary whenever the parent produces external financial statements.

4.In a global liquidation of a company:

a.All assets are paid to partners based on their initial contribution, with the oldest association paid first is the correct answer .