Q1. Explain why consolidated financial statements become increasingly important when the differential is very large.
Q2. Road Corporation acquired all of Conger Corporation’s voting shares on January 1, 20X2, for $470,000. At that time Conger reported common stock outstanding of $80,000 and retained earnings of $130,000. The book values of Conger’s assets and liabilities approximated fair values, except for land, which had a book value of $80,000 and a fair value of $100,000, and buildings, which had a book value of $220,000 and a fair value of $400,000. Land and buildings are the only noncurrent assets that Conger holds.
1.Compute the amount of goodwill at the date of acquisition.
- Give the eliminating entry or entries required immediately following the acquisition to prepare a consolidated balance sheet.
Q3. Given the following information:
a.Parent sells Sub inventory with a cost of $48,000 for $60,000. Sub then sells this inventory to outsiders for $75,000.
- Parent sells Sub inventory with a cost of $8,000 for $10,000, which remains on hand in Sub’s ending inventory.
a.Calculate unrealized profits .
b.Pass eliminating entry in both the cases:
- Parent sells to Sub and Sub to Outsider
- Parent sells to Sub, but Sub not yet to Outsider
c.How would it effect Parents gross profit and Sub’s inventory
Q4. Determination of exchange rates depends on factors causing fluctuations.
- Explain why and its effect on US dollar
- Distinguish between DER & IER.