Exam 4: Consolidations: Intragroup Transactions

A parent owns 100% of a subsidiary company. One month before its year-end date of March 31, 2031, the parent loaned the subsidiary $120,000. The subsidiary paid back $20,000 in January 2014. In the preparation of the consolidated balance sheet for March 31, 2014, What amount of this loan should be eliminated in the consolidated financial statements?

The gain/loss on the sale of a depreciable asset is realized by the subsidiary as the asset is used up by the group.

ABC Company owns 75% of XYZ Company. During 2012, XYZ Company declared and paid $5,000 in dividends. What impact did this transaction have on the separate financial statements of ABC Company?

Teckel Enterprises owns 100% of Dachsund Limited. At the beginning of the fiscal year, there was a profit in Teckel Enterprises inventory of $15,000 on goods acquired from Dachsund Limited in the previous period. The tax rate is 40%. What is the required consolidated financial statement adjustments?

The requirement for the full adjustment relating to the effects of intragroup transactions is stated in IFRS consolidated financial statements as follows:

The use of the services of a specialist from a parent to a subsidiary for a short period of time within a year requires the following treatment in the consolidated statements:

How are adjustments for intragroup dividends made in the consolidated financial statements?

Which of the following is NOT a requirement for intragroup transactions under IFRS?

Why are adjustments required for intragroup services such as management fees?

Dividends from subsidiary equity are recognized in equity by the:

Dither Co. owns 100% of the common shares of Franklin Ltd. Dither records its investment in Franklin using the cost method. Dither and Franklin have transactions with each other. In preparing Dither's consolidated financial statements, which of the following should be done?

Consolidated financial statements show only the effects of dividends paid or payable to entities outside the group.

On January 1, 2013 a parent purchased the plant of a subsidiary for $ 6,000, which was $1,000 below the carrying cost for the subsidiary as at the date it was sold. The plant had a remaining life of ten years and the income tax rate was 30%. What amounts should be shown as a loss on sale of plant and the income tax expense respectively on the consolidated financial statements for the year ended December 31, 2013?

In the transferring of assets such as property, plant, and equipment within a group there is no need to eliminate profit in an asset such as land because land is a non-depreciable asset.

In consolidated financial statements of a parent and subsidiaries, an income tax adjustment is necessary:

Where inventory is transferred in the current period and some or all of that inventory is still on hand at the end of the period, the general form of financial statement adjustment is:

Opening intragroup inventory transfers of an acquired subsidiary require that prior period profits remaining in the opening inventory be adjusted to beginning retained earnings.

When property, plant, and equipment is transferred within a group, it is not necessary to distinguish between a sale of land and the sale of a depreciable asset.

In an acquisition of land by a parent from a subsidiary, the realization of profit acquired on the land acquisition is recorded in the consolidated financial statements?

On December 31, 2011 PDI Ltd acquired 100% of the company ABC for $100,000. At the day of acquisition fair values equalled book values. The tax rate for both entities is 30%. On December 31, 2013 the following are the individual financial statements for both companies: Additional information: 1. PDI Ltd. loaned ABC Company $30,000 at an interest rate of 7% on January 1, 2013, payable annually on December 31. 2. PDI Ltd. has included both quarterly and final dividends from ABC Company in revenue. 3. On June 30, 2013 PDI Ltd. sold inventory costing $25,000 to ABC Company for $40,000. All of this inventory was sold to external entities for $60,000 before December 31, 2013. 4. In 2012, PDI Ltd. Sold land to ABC Company for $15,000 above its original recorded cost. The land is still held by ABC Company as at December 31, 2013. Required: Prepared the consolidated financial statements at December 31, 2013for PDI Ltd and its subsidiary.