Exam 3: Partially Owned Created Subsidiaries & Variable Interest Entities

For partially owned subsidiaries, part of the rationale of full consolidation is that the parent has a separable percentage interest in each individual asset, liability, and income statement account of the subsidiary.

The equity method can be used in lieu of consolidation.

Having certain financial arrangements with another entity that result in control is having effective legal control.

matching based on the information given. The following (a) seven account balances and (b) statements of retained earnings were obtained from the separate company statements of Parr Inc. and its 80%-owned created sub-sidiary, Subb Inc. (Parr's only subsidiary), at the end of 2006: When Subb was created (in 2004, 20% of the common shares it issued were sold to private investors. Requirement 1: How is each of the first 11 preceding items reported in Parr's 2006 consolidated statements? Use the following list of possible answer codes in the answer columns: -_____(item 7)

Only a(n) _____________________________________________ subsidiary can pay U.S. income taxes at the subsidiary level.

based on the information given. The following (a) seven account balances and (b) statements of retained earnings were obtained from the separate company statements of Parr Inc. and its 80%-owned created sub-sidiary, Subb Inc. (Parr's only subsidiary), at the end of 2006: When Subb was created (in 2004, 20% of the common shares it issued were sold to private investors. Requirement 2: For items 12-15, calculate the amount that would appear in the 2006 consolidated statements -_____(item 13)

based on the information given. The following (a) seven account balances and (b) statements of retained earnings were obtained from the separate company statements of Parr Inc. and its 80%-owned created sub-sidiary, Subb Inc. (Parr's only subsidiary), at the end of 2006: When Subb was created (in 2004, 20% of the common shares it issued were sold to private investors. Requirement 2: For items 12-15, calculate the amount that would appear in the 2006 consolidated statements -_____(item 14)

_____Under the FASB's consolidation rules, an entity that is controlled by financial arrangements (rather than by a majority voting interest)

_____ Which of the following is not an advantage of filing a consolidated tax return?

_____ Parco, a publicly owned company, could properly not consolidate Sarco, which is

The fair value method of valuing an investment in an unconsolidated subsidiary can be used only if the subsidiary is _________________________________.

matching based on the information given. The following (a) seven account balances and (b) statements of retained earnings were obtained from the separate company statements of Parr Inc. and its 80%-owned created sub-sidiary, Subb Inc. (Parr's only subsidiary), at the end of 2006: When Subb was created (in 2004, 20% of the common shares it issued were sold to private investors. Requirement 1: How is each of the first 11 preceding items reported in Parr's 2006 consolidated statements? Use the following list of possible answer codes in the answer columns: -_____(item 9)

If a subsidiary is not consolidated, the parent can arbitrarily choose between either the equity method or the cost method.

Controlling an entity by means other than a voting majority interest is referred to as having ________________________________________ control.

matching based on the information given. The following (a) seven account balances and (b) statements of retained earnings were obtained from the separate company statements of Parr Inc. and its 80%-owned created sub-sidiary, Subb Inc. (Parr's only subsidiary), at the end of 2006: When Subb was created (in 2004, 20% of the common shares it issued were sold to private investors. Requirement 1: How is each of the first 11 preceding items reported in Parr's 2006 consolidated statements? Use the following list of possible answer codes in the answer columns: -_____(item 3)

matching based on the information given. The following (a) seven account balances and (b) statements of retained earnings were obtained from the separate company statements of Parr Inc. and its 80%-owned created sub-sidiary, Subb Inc. (Parr's only subsidiary), at the end of 2006: When Subb was created (in 2004, 20% of the common shares it issued were sold to private investors. Requirement 1: How is each of the first 11 preceding items reported in Parr's 2006 consolidated statements? Use the following list of possible answer codes in the answer columns: -_____(item 6)

The U.S. income tax system taxes ___________________________________ income.

_____ In general, an entity's equity at risk is deemed sufficient to permit the entity to finance its activities without additional subordinated financial support if the equity at risk is

In consolidating a VIE, the noncontrolling interest is initially valued at its fair value-not its book value.

_____ Under APB Opinion No. 23, parent companies must provide income taxes on their domestic subsidiaries' current earnings in a manner most analogous to