Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

During the consolidation process, we eliminate the debt and interest payments received from affiliated companies. My question to you is do you agree with this

During the consolidation process, we eliminate the debt and interest payments received from affiliated companies.

My question to you is do you agree with this elimination. If the Parent/Subsidiary is willing to lend money to each other for a stated interest rate (sometimes lower than market), why should we eliminate it? Should the standards be changed? If I borrow from the market, my interest rate could be higher and that would stay on consolidated return. So what is the harm?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials of Accounting for Governmental and Not-for-Profit Organizations

Authors: Paul A. Copley

10th Edition

007352705X, 978-0073527055

More Books

Students also viewed these Accounting questions

Question

=+ a. A change in consumer preferences increases the saving rate.

Answered: 1 week ago