*** advanced accounting

Part B: True /False Questions (6 marks) (0.75 mark each) 1. Under the equity method of accounting, a parent company's journal entry to record a dividend declared by the subsidiary includes a debit to the Retained Earnings of Subsidiary ledger account and a credit to the Dividends Revenue ledger account. 2. The depreciation and amortization of differences between current fair values and carrying amounts of a subsidiary's identifiable net assets is included in consolidated financial statements by means of working paper elimination. 3. Under the equity method of accounting, the parent company debits the Intercompany Investment Income ledger account for the depreciation and amortization of differences between the current fair values and carrying amounts of a subsidiary's identifiable net assets on the date of the business combination. 4. Under the equity method of accounting, a parent company credits the Intercompany Investment Income ledger account for dividends declared by the subsidiary. 5. Dividends declared by a subsidiary subsequent to the date of a business combination are displayed in a consolidated statement of retained earnings. to 6. Intercompany sales of merchandise by a parent company a subsidiary are similar to the intracompany shipments of merchandise by a home office to a branch. 7. Goodwill attributable to a business combination involving a partially owned subsidiary is amortized by means of a working paper elimination. 8. If a parent company has a partially owned subsidiary, there is no effect on the minority interest in net assets of the subsidiary if the subsidiary sells a plant asset to the parent company at a gain