10/31 Chapter 7 Class

Question 1

basic elimination entry BV

Answer 1

Eliminate equity sub
inv in sub
give nci income
give nci equity
example
Inc from sub 135000
NCI in NI        15000
CS                 500000
PIC                100000
RE                  120000
     INV in sub           783000
     NCI in NA              87000

Question 2

excess value FV

Answer 2

Pmt fvs on consol f/s
give CI equity
giving nci equity

Question 3

amort of excess fv

Answer 3

calculate income/loss impact of fv’s added to consolidation
allocate CI
allocate NCI

Question 4

modified equity method

Answer 4

we don’t do the excess amortization on the books

Question 5

non depreciable assets

Answer 5

similar to inventory transfer

eliminate like unrealized gross profit

Question 6

depreciable assets

Answer 6

eliminate the sellers gain and what it would be on our books

Question 7

transfer of services

Answer 7

acctg serv 100000
   Cash             100000
Cash 100000
   Service income 100000
get rid of the entry
on the test

Question 8

Ownership Land Transfer

Answer 8

they sold 40000 land for 100000 to the sub we have to 
Dr Gain 60000
    Cr Land 60000
in the first year
the next year
DR RE 60000
   CR Land 60000
because the gain is no longer on the income statement
in 2007 they sold it
Cash 120
    Gain 20
    Land 100
should have been
cash 120
    Gain 80 
    Land 40
2007
DR RE 60000
    CR Gain 60000
we do this because the gain should have been 80 they already took 20 so we add on the 60

Question 9

test

Answer 9

basic, excess value, amort of excess,

Question 10

depreciable asset

Answer 10

upstream transaction

Question 11

problem

Answer 11

do 7-12 do it do it do it.
do chapter 7 homework and do that problem
do beginning retained earnings