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33) Bowen Limited purchased 60% of Sloch Co. when Sloch's reported retained earnings of $330,000. Bowen also owns 80% in Zeek Limited, which was purchased when Zeek reported retained earnings of $575,000. For each acquisition, the purchase price was equal to the fair value of the identifiable net assets which was the same as the carrying value of their carrying values. An analysis of the changes in retained earnings of the three companies at December 31, 20X7 was: Bowen Sloch Zeek Retained earnings — January 1, 20X7 $1,020,000 $525,000 $875,000 Net income for the year 750,000 360,000 275,000 Dividends paid […]

31) Lobes Co. owns 65% of Banes Limited. During 20X5, Banes sold equipment to Lobes for a gain of $150,000, recognizing a gain on sale (before taxes) of $75,000. Lobes has determined that the equipment had a useful life of 10 years, and took a full year's deprecation in 20X5. On April 1, 20X8, Lobes sold the equipment to an unaffiliated company for $110,000. Ignore any taxes. Required: Prepare the appropriate consolidation adjustments relating to the equipment for each year ending December 31, 20X5 to 20X8.

11) In preparing consolidation working papers, why is it necessary to eliminate intercompany profits? A) To nullify the effect of intercompany transactions on consolidated financial statements B) To defer intercompany profits until the following year C) To allocate unrealized profits until the following year D) To reduce consolidated income 12) Taguchi Ltd. owns 80% of Shag Co. Shag declared and paid $100,000 in dividends. Taguchi uses the cost method to record its investment in Shag. In preparing Taguchi's consolidated financial statements, what elimination entry must be made with respect to the dividends? A) DR  Dividend income 80,000       CR  Dividends […]

  1) Which of the following organizations does IFRS 8 not apply to? A) Banks B) Mutual life insurance companies C) Private companies D) Cooperative business enterprises 2) Which of the following is not a requirement in defining an operating segment? A) The particular component must be generating revenue. B) The particular component's operating results must be reviewed regularly by responsible company officers. C) The particular component's financial information is routinely available through the organization's financial reporting system. D) The particular component incurs expenses in its normal cost of activities. 3) Which of the following is not an aspect in […]

31) On March 1, 20X2, McBride Ltd. issued a purchase order to Tao Heavy Machines (Singapore) Inc. to acquire a drilling machine for $400,000 SGD. On the same day, McBride entered into a forward contract to receive $400,000 SGD on July 31, 20X2. The machine was delivered on June 1, 20X2 and payment was made July 31, 20X2. McBride has an April 30 year-end. The following information has been provided: Date Spot Rate Forward rate to July 31, 20X2 March 1, 20X2 .7686 .7810 April 30, 20X2 .7702 .7818 June 1, 20X2 .7940 .7985 July 31, 20X2 .7995 n/a Assume […]