Advanced Financial Accounting
12th Edition
ISBN: 9781259916977
Author: Christensen, Theodore E., COTTRELL, David M., Budd, Cassy
Publisher: Mcgraw-hill Education,
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Chapter 12, Problem 12.28P
a
To determine
Introduction: Re-measurement is redrafting the financial statement of foreign entities from the local currency to the functional currency of the foreign entity. Re-measurement is necessary when the functional currency is different from the local currency used to maintain the books of a foreign entity.
The elimination entries required to prepare three part consolidation worksheet as of December 31, 20X3.
a
Expert Solution
Explanation of Solution
| Particulars | Debit $ | Credit $ |
| 1. To eliminate income from subsidiary | ||
| Income from subsidiary | 43,368 | |
| Dividends declared | 4,824 | |
| Investment in subsidiary | 38,544 | |
| (Income from Subsidiary eliminated by reverse entry) | ||
| 2. Assignment of income to non-controlling interest | ||
| Income to non-controlling interest | 12,522 | |
| Dividends declared | 1,206 | |
| Non-controlling interest | 11,316 | |
| (Assignment of income to non-controlling interest) | ||
| 3. Elimination of beginning investment | ||
| Common stock | 63,000 | |
| 28,000 | ||
| Differential | 67,200 | |
| Investment in subsidiary | 140,000 | |
| Non-controlling interest | 18,200 | |
| (Beginning investment in subsidiary eliminated by reversal) | ||
| 4. Assignment of differential | ||
| Plant and equipment | 28,000 | |
| Patient | 39,200 | |
| Differential | 67,200 | |
| (Differential on patient, plant and equipment assigned) | ||
| Amortization of differential | ||
| 2,800 | ||
| 5. Amortization expenses | 3,920 | |
| | 2,800 | |
| Patient | 3,920 | |
| (Amortization of differential on patient, plant and equipment) | ||
| 6. Eliminate intercompany payable and receivable | ||
| Payable to P | 6,480 | |
| Receivable from SR | 6,480 | |
| (Intercompany receivable and payable eliminated by setoff) |
- Income from subsidiary eliminated by reversal
- Income assigned to non-controlling interest. income to non-controlling interest
- Beginning investment in subsidiary eliminated
- Investment in subsidiary
Non-controlling interest
- Differential assigned to assets by debit entry and credit differential account
- Amortization of differential recognized by debiting depreciation and amortization and credit accumulated depreciation and patient.
- Intercompany receivable and payable eliminated by setoff entry.
b
To determine
Introduction: Re-measurement is redrafting the financial statement of foreign entities from the local currency to the functional currency of the foreign entity. Re-measurement is necessary when the functional currency is different from the local currency used to maintain the books of a foreign entity.
The three part consolidation worksheet as of December 31, 20X3.
b
Expert Solution
Answer to Problem 12.28P
Retained earnings and net assets as per consolidation worksheet $339,024 and 1,162,840 respectively
Explanation of Solution
P. Inc. and subsidiary
Consolidation worksheet
For year ending December 31, 20X3
| elimination | |||||
| items | P $ | SR $ | Debit $ | Credit $ | Consolidation $ |
| Sales | 1,000,000 | 376,350 | 1,376,350 | ||
| Income from subsidiary | 43,368 | 43,368 | |||
| Re-measurement gain | 10,040 | 10,040 | |||
| 1,043,368 | 386,390 | 1386,390 | |||
| Less: | |||||
| Cost of goods sold | (600,000) | (217,800) | (817,800) | ||
| Depreciation expenses | (28,000) | (16,800) | 2,800 | (47,600) | |
| Amortization expenses | 3,920 | (3,920) | |||
| Operating expense | (204,000) | (85,475) | (289,475) | ||
| Interest expense | (2,000) | (3,705) | (5,705) | ||
| Net income | 221,890 | ||||
| Income to non-controlling interest | 12,522 | (12,522) | |||
| Net income carry forward | 209,368 | 62,610 | 62,610 | 0 | 209,368 |
| Retained earnings Jan 1 | 179,656 | 28,000 | 28,000 | 179,656 | |
| Net income | 209,368 | 62,610 | 62,610 | 0 | 209,368 |
| Less: Dividends declared | (50,000) | (6,030) | 4,824 | ||
| 1,206 | (50,000) | ||||
| Retained earnings DEC 31 | 339,024 | 84,580 | 90,610 | 6,030 | 339,024 |
| Cash | 38,000 | 26,460 | 64,460 | ||
| Accounts receivable | 140,000 | 43,200 | 183,200 | ||
| Receivable from SR | 6,480 | 6,480 | |||
| Inventory | 128,000 | 55,900 | 183,900 | ||
| Plant and equipment | 500,000 | 168,000 | 28,000 | 696,000 | |
| Investment in subsidiary | 178,544 | 38,544 | |||
| 140,000 | |||||
| Differential | 67,200 | 67,200 | |||
| Patient | 39,200 | 3,920 | 35,280 | ||
| 991,024 | 293,560 | 1,162,840 | |||
| Accumulated depreciation | 90,000 | 42,000 | 2,800 | 134,800 | |
| Accounts payable | 60,000 | 32,280 | 92,280 | ||
| Payable to P | 6,480 | 6,480 | |||
| Interest payable | 2,000 | 1,800 | 3,800 | ||
| Bonds payable | 60,000 | 60,000 | |||
| Premium on bonds | 3,420 | 3,420 | |||
| Common stock | 500,000 | 63,000 | 63,000 | 500,000 | |
| Retained earnings | 339,024 | 84,580 | 90,610 | 6,030 | 339,024 |
| Non-controlling interest | 11,316 | ||||
| 18,200 | 29,516 | ||||
| 991,024 | 293,560 | 294,490 | 294,490 | 1,162,840 | |
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Chapter 12 Solutions
Advanced Financial Accounting
Ch. 12 - Prob. 12.1QCh. 12 - Prob. 12.2QCh. 12 - Prob. 12.3QCh. 12 - How widely used are IFRS? Can IFRS be used for...Ch. 12 - Prob. 12.5QCh. 12 - Prob. 12.6QCh. 12 - Prob. 12.7QCh. 12 - Prob. 12.8QCh. 12 - Prob. 12.9QCh. 12 - Prob. 12.10Q
Ch. 12 - Prob. 12.11QCh. 12 - Prob. 12.12QCh. 12 - Prob. 12.13QCh. 12 - Prob. 12.14QCh. 12 - Prob. 12.15QCh. 12 - Prob. 12.16QCh. 12 - Prob. 12.17QCh. 12 - Prob. 12.18QCh. 12 - Prob. 12.19QCh. 12 - Prob. 12.20QCh. 12 - Prob. 12.4CCh. 12 - Prob. 12.5CCh. 12 - Prob. 12.6CCh. 12 - Prob. 12.7CCh. 12 - Prob. 12.1.1ECh. 12 - Prob. 12.1.2ECh. 12 - Prob. 12.1.3ECh. 12 - Prob. 12.1.4ECh. 12 - Prob. 12.1.5ECh. 12 - Prob. 12.1.6ECh. 12 - Prob. 12.1.7ECh. 12 - Prob. 12.2.1ECh. 12 - Prob. 12.2.2ECh. 12 - Prob. 12.2.3ECh. 12 - Prob. 12.2.4ECh. 12 - Prob. 12.2.5ECh. 12 - Prob. 12.2.6ECh. 12 - Prob. 12.3ECh. 12 - Prob. 12.4.1ECh. 12 - Prob. 12.4.2ECh. 12 - Prob. 12.4.3ECh. 12 - Prob. 12.4.4ECh. 12 - Prob. 12.4.5ECh. 12 - Prob. 12.4.6ECh. 12 - Prob. 12.4.7ECh. 12 - Prob. 12.5ECh. 12 - Prob. 12.6ECh. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.9ECh. 12 - Prob. 12.10ECh. 12 - Prob. 12.11ECh. 12 - Prob. 12.12ECh. 12 - Prob. 12.13ECh. 12 - Prob. 12.14ECh. 12 - Prob. 12.15ECh. 12 - Prob. 12.16PCh. 12 - Prob. 12.17PCh. 12 - Prob. 12.18PCh. 12 - Prob. 12.19PCh. 12 - Remeasurement Gain or Loss Refer to the...Ch. 12 - Prob. 12.21PCh. 12 - Remeasurement and Proof of Remeasurement Gain or...Ch. 12 - Translation Palermo Inc. purchased 80 percent of...Ch. 12 - Prob. 12.24PCh. 12 - Prob. 12.25PCh. 12 - Prob. 12.26PCh. 12 - Prob. 12.27PCh. 12 - Prob. 12.28PCh. 12 - Prob. 12.29PCh. 12 - Prob. 12.30PCh. 12 - Prob. 12.31PCh. 12 - Prob. 12.32PCh. 12 - Prob. 12.33P
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