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Shortcut Charlie usually manages to develop some simple rule to handle even the most complex situations. In providing for the elimination of the effects of inventory transfers between the parent company and a subsidiary or between subsidiaries, Shortcut started with the following rules. 1. When the buyer continues to hold the inventory at the end of the period, credit cost of goods sold for the amount recorded as cost of goods sold by the company that made the intercompany sale. 2. When the buyer resells the inventory before the end of the period, credit cost of goods sold for the amount recorded as cost of goods sold by the company that made the intercompany sale plus the profit recorded by that company. 3. Debit sales for the total amount credited in rule 1 or 2 above. One of the new employees is seeking some assistance in understanding how the rules work and why. Required a. Explain why rule 1 is needed when consolidated statements are prepared. b. Explain what is missing from rule 1, and prepare an alternative or additional statement for the elimination of unrealized profit when the purchasing affiliate does not resell to an unaffiliated company in the period in which it purchases inventory from an affiliate. c. Does rule 2 lead to the correct result? Explain your answer. d. The rules do not provide assistance in determining how much profit was recorded by either of the two companies. Where should the employee look to determine the amount of profit referred to in rule 2?
Suppose that Wolfe were to use a single, predetermined overhead rate based on machine hours. Compute the rate per hour and the total overhead assigned.
Discuss the effects that a drop in value of the U.S. dollar in relation to other currencies on the foreign exchange markets has on:
Required: Compute the fair value of LLL's liabilities that Compton incurred in the acquisition.
Apollo Shoes is satisfied with the services your firm offers and wants to continue with the audit. Apollo Shoes would like you to prepare a letter explaining how you plan to begin the audit process.
the towson manufacturing corporation applies overhead on the basis of machine hours. the following divisional
How may financial managers budget for unforeseen changes and improveme. How may financial managers budget for unforeseen changes and improvements in information technology that require large capital outlays?
The ledgers of Mid City Galleries Inc. contain the following balances as of December 31, 2006. Prepare in good form a multiple-step income statement for Mid City Galleries.
Javier Ceenao, president of Halsey Co., is concerned that the method used to account for and write off uncollectible receivables in unsatisfactory. He has asked fo your advice in the analysis of past operations in this are and for recommendations ..
a lawn care company stated business on january 1 2012. the company billed clients 105000 for lawn care services
write a 750- to 1050-word paper in apa format including citations and references summarizing your ideas about internal
Identify three major accounting issues on which IFRS and US GAAP currently differ. For each, outline briefly the nature of the divergence, and discuss the potential impact if the IFRS position is adopted in the US.
a company produces bird food. during april itproduced147 batches of food each batch weighing 100 lbs. toproduce this
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