Questions from Financial Accounting

Q: Kruse Corporation holds 60 percent of the voting common shares of Gary’s

Kruse Corporation holds 60 percent of the voting common shares of Gary’s Ice Cream Parlors. On January 1, 20X6, Gary’s purchased $50,000 par value, 10 percent first mortgage bonds of Kruse from Cane f...

Q: For a multicorporate entity, how is the recognition of gains or

For a multicorporate entity, how is the recognition of gains or losses on bond retirement changed when emphasis is placed on the economic entity rather than the legal entity?

Q: When a parent company sells land to a subsidiary at more than

When a parent company sells land to a subsidiary at more than book value, the consolidation entries at the end of the period include a debit to the gain on the sale of land. When a parent purchases th...

Q: What is the effect of eliminating intercompany interest income and interest expense

What is the effect of eliminating intercompany interest income and interest expense on consolidated net income when bonds have been sold directly to an affiliate? Why?

Q: What is the effect of eliminating intercompany interest income and interest expense

What is the effect of eliminating intercompany interest income and interest expense on consolidated net income when a loss on bond retirement has been reported in a prior year’s consolidated financial...

Q: If an affiliate’s bonds are purchased from a nonaffiliate at the beginning

If an affiliate’s bonds are purchased from a nonaffiliate at the beginning of the current year, how can the amount of the gain or loss on constructive retirement be computed by looking at the two comp...

Q: When the parent company purchases a subsidiary’s bonds from a nonaffiliate for

When the parent company purchases a subsidiary’s bonds from a nonaffiliate for more than book value, what income statement accounts will be affected in preparing consolidated financial statements? Wha...

Q: How does the consolidation process deal with a subsidiary’s preferred stock?

How does the consolidation process deal with a subsidiary’s preferred stock?

Q: How would the relationship between interest income recorded by a subsidiary and

How would the relationship between interest income recorded by a subsidiary and interest expense recorded by the parent be expected to change when comparing a direct placement of the parent’s bonds wi...

Q: A subsidiary purchased bonds of its parent company from a nonaffiliate in

A subsidiary purchased bonds of its parent company from a nonaffiliate in the preceding period, and a gain on bond retirement was reported in the consolidated income statement as a result of the purch...