ACCT 123 MIDTERM V2
True or False: (Chapter 4)
1. All intercompany transactions generally are related-party transactions.
Answer: True
2. All related-party transactions are intercompany transactions.
Answer: F
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ACCT 123 MIDTERM V2
True or False: (Chapter 4)
1. All intercompany transactions generally are related-party transactions.
Answer: True
2. All related-party transactions are intercompany transactions.
Answer: False
3. Intercompany inventory transfers at cost need not be eliminated in consolidation. Answer: False
4. When a noncontrolling interest exists, intercompany sales on downstream intercompany inventory transfers need be eliminated only to the extent of the non-controlling interest ownership percentage— not 100%.
Answer: False
5. Intercompany transactions are eliminated in consolidation because they are related-party transactions. Answer: False
True or False: (Chapter 5)
6. When land is sold between affiliated companies a book value, no adjustments or eliminations are needed in preparing the consolidated financial statements.
Answer: True
7. The existence on NCI in a selling subsidiary only affects the allocation of the eliminated unrealized gain or loss and not the amount eliminated.
Answer: True
8. Intercompany gains and losses are eliminated as they are merely transfer of assets between associated companies. Answer: True
9. The profit or loss from intercompany transactions are considered only paper income or loss. Answer: True
True or False: (Chapter 6)
10. Functional currency is the currency in which the entity’s transactions are conducted. Answer: True
11. Presentation Currency is the currency in which the financial statements are presented. Answer: True
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