In January of 2019, a wholly owned subsidiary sold Equipment to
the parent for a cash price of $122,500. The subsidiary had
acquired the equipment at a cost of $140,000 and the estimated
useful life when purchased was 10 years, and there was no salvage
value. The subsidiary had depreciated the equipment for 4 years at
the time of sale using the straight line method. The parent
retained the depreciation policy of the subsidiary and depreciated
the equipment over its...
A wholly-owned subsidiary declares and pays a cash dividend.
What effect does the dividend have on the consolidated balance
sheet?
A. Increases cash and decreases retained earnings.
B. No effect on cash and decreases retained earnings.
C. Decreases cash and decreases retained earnings.
D. No effect on the consolidated balance sheet.
A Singaporean operation is a wholly owned subsidiary of an
Australian company which regards the operation as a long term
investment, and thus takes no part in the day to day decision
making of the operation. The operation purchases parts from various
Australian manufacturers for assembly by Singaporean labour. The
finished product is exported to a number of countries but Singapore
is still the major market. Consequently, sales price is dominated
by competition within Singapore and follows the local regulations...
A Singaporean operation is a wholly owned subsidiary of an
Australian company which regards the operation as a long term
investment, and thus takes no part in the day to day decision
making of the operation. The operation purchases parts from various
Australian manufacturers for assembly by Singaporean labour. The
finished product is exported to a number of countries but Singapore
is still the major market. Consequently, sales price is dominated
by competition within Singapore and follows the local regulations...
Dairyworld is a wholly owned subsidiary of Saputo based in
Montreal and they produce all kinds of milk products, in
particular, fresh dairy milk. Saputo now wants to explore the Asian
market and has targeted the Philippines as a prime location for
their first expansion into Asia. The Board of Saputo has given the
green light for Senior Management to pursue aggressively more
international markets particularly with the growing population and
the economic growth in Asia.
1. If Saputo wishes...
When a parent company requires its wholly owned subsidiary to
use “push-down” accounting, the subsidiary records an account
called re-evaluated capital. This account represents
a. the increase in fair market value and goodwill
components of the parent’s purchase price.
b. the ending balance of the investment account on
the parent’s books using the equity method.
c. the increase in fair market value of the
subsidiary’s stock as a result of the purchase.
d. the new owners’ equity...
The following information is available concerning transactions
between a parent and its wholly-owned subsidiary for the current
year. The parent sells merchandise to the subsidiary at a markup of
20% on cost. The subsidiary’s beginning inventory includes $30,000
purchased from the parent, and its ending inventory includes
$42,000 purchased from the parent. Total sales from the parent to
the subsidiary were $800,000. The subsidiary sold plant assets to
the parent in a prior year, charging the parent $650,000. The plant...