F3 Flashcards
1
Q
Consolidated vs. Combined F/S’s
A
These are treated the same! Combined F/S’s are prepared in the same way as consolidated except that there is no parent company (so no investment in ____ account to reduce against subsidiary equity)
2
Q
How is a parent bond bought by a subsidiary accounted for?
A
It’s treated as if the bond were retired when the F/S’s were consolidated!
The BV of the bond - the new purchase price = Gain (or Loss) on retirement
3
Q
Intercompany Sales – How do you treat them when preparing F/S’s?
A
Eliminate all intercompany transactions!!
