ACC 577 OUTLET Great Stories /acc577outlet.com ACC 577 OUTLET Great Stories /acc577outlet.com | Page 4

Question 11
Parco owns 100% of its subsidiary, Subco, which it acquired at
book value. It carries its investment in Subco on its books using
the equity method of accounting. At the beginning of its 2009
fiscal year, the investment in Subco account was $552,000. During
2009 Subco reported the following: In preparing its 2009 fiscal
year consolidated statements, which one of the following is the
total amount of equity revenue that Parco will have to reverse for
2009 as a result of it ownership of Subco?
Question 12
Which of the following kinds of transactions should be eliminated
in the consolidating process?
Question 13
Which of the following statements concerning the primary
beneficiary of a variable-interest entity is/are correct? I. The
primary beneficiary has the ability to direct the most significant
economic activities of the variable-interest entity. II. Only one
entity can be the primary beneficiary of a variable-interest entity.
III. The investor that has the greatest equity ownership in a
variable-interest entity will be the primary beneficiary of the
entity.
Question 14
Sun Co. is a wholly owned subsidiary of Star Co. Both companies
have separate general ledgers, and prepare separate financial
statements. Sun requires stand-alone financial statements. Which
of the following statements is correct?
Question 15