Learning Goal: I’m working on a management multi-part question and need support to help me learn.
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(1) Stubben Corporation is a 90%-owned subsidiary of Parker Corporation, acquired for $290,000 on 1/1/2005.
o Investment cost was equal to book value and fair value.
o Stubbens net income in 2005 was $80,000, and Parkers income, excluding its income from Stubben, was $100,000.
o Parkers income includes a $8,000 unrealized gain on land that cost $40,000 and was sold to Stubben for $48,000.
o Assume that Stubben sold the land in 2007 for $64,000. Assume Parker adjusts for this transaction in the equity accounts.
o Split up the adjustment for unrealized gains proportionately.
Required:
1. What Entry(ies) would Parker make in 2005 and 2007?
2. Prepare the consolidation entries at 12/31/2005, 12/31/2006, and 12/31/2007.
(5 Marks)
(2) Relationship between Currencies and Exchange Rates:
|
Exchange Rates |
January 1, 2022 |
June 30, 2022 |
December 31, 2022 |
|
Direct Exchange Rate |
|||
|
Indirect Exchange Rate |
Required:
a) Choose any two currencies of the two nations
b) Determine the Direct and Indirect Exchange Rates on the above given dates in table.
c) Explain clearly the Decrease or Increase in the DER and IER during the two period given in the table.
d) Explain Relative Strengths and Weaknesses of these currencies during these periods.
e) Discuss the impact of Changes in the Exchange Rates on the Import and Export of these nations.
(5 Marks)
(3) Partnership form of business organisation has certain pros and cons. Explain any Two advantages and Two Disadvantage of Partnership form of business organisation. (5 Marks)
