Question

If you had to choose among the current method of consolidation for combinees where the combinor...

If you had to choose among the current method of consolidation for combinees where the combinor owns at least 50%, the new entity approach, or proportionate consolidation, which would you choose? Explain.

Textbook: Accounting Theory: Conceptual Issues in a Political and Economic Envirnoment (9th edition) by Wolk, Dodd & Rozycki

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer:

For the purpose of consolidation, if the combinor owns atleast 50% of the combinees, the new entity approach will be used.

Explanation:

A. New entity approach: The method is used for the purposes of consolidation when the entity exercises control over the other entity. Owning more than 50% of the other entity represents exercising control over that entity. Under this method of consolidation, the fair values of the parent and the subsidiary are added together to form a new basis of accountability for the ongoing economic entity.

B. Proportionate consolidation: This method is used to report a firm's proportionate interest in a joint venture. Under this method, proportionate assets and liabilities (to the extent of ownership in the joint venture) will be consolidated with the parent entity.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Choose the correct answer from the options The underlying theme of the conceptual framework is (E1-PC1)...
Choose the correct answer from the options The underlying theme of the conceptual framework is (E1-PC1) decision usefulness. understandability. faithful representation. comparability. The objective of financial reporting in the International Accounting Standards Board’s (IASB’s) Conceptual Framework (E1-PC1) Is the foundation for the Framework. Includes the qualitative characteristics that make accounting information useful. Is found on the third level of the Framework. All of the choices are correct regarding the objective of financial reporting. The second level in the International Accounting...
1. Which of the following best describes the current ratio? A. Debt ratio B. Operating performance...
1. Which of the following best describes the current ratio? A. Debt ratio B. Operating performance ratio C. Liquidity ratio D. Efficiency ratio 2. Which of the following is not likely to be used to measure a company's liquidity? A. Working capital B. Financial leverage C. Current ratio D. Acid-test (quick) ratio 3. Which of the following industries would you expect to have the longest operating cycle? A. Fast food industry B. Aerospace industry C. Discount retail store industry D....
Task In your accounting career you will be required to analyse current accounting issues and communicate...
Task In your accounting career you will be required to analyse current accounting issues and communicate your theoretical understanding to your professional colleagues and your clients. For this assignment assume that you are the senior accountant working for a major firm. Question 1 - 9 marks (1,500 words) The CEO has forwarded to you an interesting article and requires you to provide her with a deeper theoretical understanding of the issues discussed so that she can fully engage in the...
Economic profits have risen in the US economy since the financial crisis of 2008. Among the...
Economic profits have risen in the US economy since the financial crisis of 2008. Among the four economic structures we are currently studying, the models of pure competition and monopolistic competition predict that in such an environment we will observe competitive firms emerging to capture a share of these increased profits, but then for there to be an eventual return to normal profit levels. Instead, we have observed increased consolidation and, hence, increased ownership concentration over the past decade. This...
The Senior Partner of the firm you work for has appointed you to a new role....
The Senior Partner of the firm you work for has appointed you to a new role. It is now your responsibility to review upcoming accounting standards and provide a report to the partners on the proposed standard and the opinions of other industry players on the changes. Firstly, you are required to find a current exposure draft or proposal for a new accounting standard which has been opened for public comments. (These can be found on the websites of most...
Project Update 1 please just this question Write up to a 1/2 page on where you...
Project Update 1 please just this question Write up to a 1/2 page on where you are at on your ethics project Attached is my project, and I am using walmart. Please just do the half page summary.. the below is just my outline of what I will have due later. COMPANY PROJECT BUS 285 You are to analyze a company of you chose in the Orientation assignment. Your project must include the following sections, and at a minimum address...
This case assignment draws from the Business Information Systems and the Systems Acquisition and Development modules...
This case assignment draws from the Business Information Systems and the Systems Acquisition and Development modules (Chapters 5 to 8). Its purpose is to provide you with experience in analyzing organizational information systems, making recommendations to improve these systems, and formulating a plan to execute on your recommendations. 1. Recommend one of your alternatives that is the best solution to the main issue and justify your recommendation. Your justification should be based on the key decision criteria and you must...
Juanita is deciding whether to buy a skirt that she wants, as well as where to...
Juanita is deciding whether to buy a skirt that she wants, as well as where to buy it. Three stores carry the same skirt, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, located 15 minutes away from where she works, and pay a marked-up price of $129 for the skirt: Store Travel Time Each Way Price of a Skirt (Minutes) (Dollars per skirt) Local Department...
It had been a busy day for Marsha Chamberland. She had spent most of it cleaning...
It had been a busy day for Marsha Chamberland. She had spent most of it cleaning and running errands in prepara- tion for her brother-in-law Ed’s return, and now she was preparing a quick dinner for her family. Ed, an industry official whose job it was to decide whether or not new products needed premarket approval by the U.S. Food and Drug Administration, had spent the last two weeks in Tennessee expressing his views on genetic engineering in food. He...
Case study 1.3: Equal prize money in tennis A British cabinet minister has now stepped into...
Case study 1.3: Equal prize money in tennis A British cabinet minister has now stepped into the debate regarding equal prize money at Wimbledon, the British Open tennis championships. Patricia Hewitt (no relation to the men’s winner), the Trade and Industry Secretary, announced that it is ‘simply wrong’ that the winner of the men’s singles should collect £525,000, while the women’s winner should receive only £486,000, when they had both worked equally hard. The debate regarding prize money is not...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT