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2010-11-26_140159_bittahquiz_2

2010-11-26_140159_bittahquiz_2 - 1 In years subsequent to...

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1. In years subsequent to the year a 90% owned subsidiary sells equipment to its parent company at a gain, the non-controlling interest in consolidated income is computed by multiplying the non-controlling interest percentage by the subsidiary's reported net income: (Points: 4) minus the net amount of unrealized gain on the intercompany sale. plus the net amount of unrealized gain on the intercompany sale. minus intercompany gain considered realized in the current period. plus intercompany gain considered realized in the current period. 2. Pratt Company owns 100% of Sage Corporation. On January 1, 2011 Pratt sold equipment to Sage at a gain. Pratt had owned the equipment for four years and used a ten- year straight-line rate with no residual value. Sage is using an eight-year straight-line rate with no residual value. In the consolidated income statement, Sage's recorded depreciation expense on the equipment for 2011 will be reduced by: (Points: 4) 10% of the gain on sale. 12 1/2% of the gain on sale . 80% of the gain on sale. 100% of the gain on sale. 3. When preparing consolidated financial statement work papers, unrealized intercompany gains, as a result of equipment or inventory sales by affiliates, are allocated proportionately by percent of ownership between parent and subsidiary only when the selling affiliate is (Points: 4) the parent and the subsidiary is less than wholly owned. a wholly owned subsidiary. the subsidiary and the subsidiary is less than wholly owned . the parent of a wholly owned subsidiary. 4. Gain or loss resulting from an intercompany sale of equipment between a parent and a subsidiary is (Points: 4) recognized in the consolidated statements in the year of the sale. considered to be realized over the remaining useful life of the equipment as an adjustment to depreciation in the consolidated statements . considered to be unrealized in the consolidated statements until the equipment is sold to a third party.
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