The transfer price becomes: Select one: O a

Accounting Aug 14, 2020

The transfer price becomes: Select one: O a. A revenue for the downstream division and for the upstream division. O b. An expense for the downstream division and revenue for the upstream division. O c. A revenue for the downstream division and an expense for the upstream division. O d. An expense for the downstream division and for the upstream division.
15 Measurement Issues clarify the following except: ut of Select one: O a. How to prepare Financial Statement estion O b. Which GAAP is used. O c. How to deal with conflicts. O d. How Assets & Liabilities are evaluated.
On 15/8/2020, department A that manufactures product Alpha, transfers 20,000 units of its product, to department B, the Company changes from a negotiated transfer price of $50 per unit to a dual transfer price in which the upstream receives the local market price of $52 per unit, and the downstream pays $48 per unit, the production cost to department A is $45 per unit, the journal entry in the books of upstream to record the transfer of 20,000 units, from department A is: Select one: O a. Debit to Intercompany Sale Revenue $1,040,000 and credit to Intercompany Accounts Receivable $1,040,000. O b. Debit to Intercompany Accounts Receivable $1,040,000 and credit to Intercompany Sale Revenue $1,040,000 O c. Debit to Intercompany Accounts Receivable $960,000 and credit to Intercompany Sale Revenue $960,000 O d. Debit to Intercompany Accounts Receivable $1,000,000 and credit to Intercompany Sale Revenue $1,000,000
ABC Co., a U.S. firm, formed a German company in 2014 by purchasing the common stock of the newly formed D Inc. The functional currency of D is the euro. During their first three years, D experienced the following activity in retained earnings. 2014 Net loss 100,000 euros, 2015 Net income 200,000 euros, January 1, 2016 Dividend 150,000 euros and 2016 Net income 75,000 euros. The relevant exchange rates, December 31, 2013 1 $0.20, December 31, 2014 1 euro = $0.22, 2014 average 1 euro = $0.215, January 1, 2016 1 euro = $0.245, average 2015 1 euro = $0.25, December 31, 2016 I euro=$0.26 and average 2016 1euro = $0.25. the translated amount of net loss during 2014 is: euro = Select one: O a. $ 245,000 O b. $ 260,000. O c. $ 200,000 O d. $ 215,000

Expert Solution

1. The Transfer price becomes :

b) An expense for the downstream division and income for the upstream division

Reasoning : The upstream division is responsible for intermediate good production and which than transfers it to the downstream division which is responsible for final good production. hence, the transfer by upstream division would be revenue for it and the price at which the transfer takes place would be an expense for the downstream division.

2. Measurement issues clarify the following except :

a) how to prepare Financial Statement

3. b) Debit to Intercompany Accouns Receivable $ 1,040,000 and credit to Intercompany Sale Revenue $1,040,000900

4. The transalted amount of net loss during 2014 is

d) $ 215,000 (i.e. 100,000 euros x $ 0.215)

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