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The subsidiary company of Group XY has purchased 150,00 worth of goods its parent company. However the goods purchased have yet to arrive at the subsidiary at the end of the financial year 20X4, meaning there is a disagreement in the current account balances between the parent and subsidiary.
With Group XY looking to produce its CSOFP for the end of the financial year, which of the following statements are true in relation to accounting for this disagreement? Select ALL that apply.
Suggested Answer: A
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37 comments · newest first
SU
Susy
11 months ago
E sounds right, the parent company should debit payables.
HU
Hubert
11 months ago
D doesn't make sense, why would they credit inventory?
AN
Anglea
11 months ago
Wait, C seems off. How can they include it in next year's CSOFP?
AD
Adell
12 months ago
I think B is correct too, inventory should be debited.
CA
Carman
12 months ago
A is definitely true, adjustments need to be made for consolidation.
DE
Denae
1 year ago
I’m confused about B and D; I thought we would debit inventory but not credit it since the goods aren't physically there yet.
TA
Tamra
1 year ago
I feel like we had a similar question in practice about intercompany transactions, and I think E makes sense because the parent needs to reflect the payable.
LA
Lauran
1 year ago
I'm not entirely sure, but I think C could be wrong since the goods should still be recognized in the current year, right?
VI
Viola
1 year ago
I remember we discussed how inventory should be recognized even if it hasn't arrived yet, so I think A might be correct.
SK
Skye
1 year ago
The key here is that the goods haven't arrived at the subsidiary yet, so they shouldn't be included in the subsidiary's inventory. I believe the correct approach is to debit the payables account of the parent company and credit the receivables account of the subsidiary.
AN
Annelle
1 year ago
Based on the information provided, I think the 150,000 should be credited to the subsidiary's payables account and debited to the parent company's receivables account. But I'm not 100% sure.
BA
Barney
1 year ago
I'm a bit confused about whether the 150,000 should be debited or credited to the subsidiary's inventory account. I'll need to review the options carefully.
KA
Kassandra
1 year ago
Okay, let's think this through step-by-step. The subsidiary purchased 150,000 worth of goods from the parent company, but the goods haven't arrived yet. So we need to figure out how to account for this in the CSOFP.
JE
Jettie
1 year ago
This question seems straightforward, but I want to make sure I understand the key details before selecting my answers.
DE
Deane
1 year ago
This question seems straightforward, I think the answer is B - Phases B, C, and D.
KE
Kenneth
1 year ago
I'm feeling pretty good about this one. The correct answers are B, C, and F. The subsidiary should debit the inventory account, the goods will be included in the next year's CSOFP, and the payables account of the subsidiary should be credited. Easy peasy, right? Now, where's the snack bar?
EL
Elza
1 year ago
Exactly, easy peasy! Let's go find that snack bar now.
TA
Talia
1 year ago
So, the payables account of the subsidiary should be credited, correct?
CA
Cassi
1 year ago
Yes, the goods not arriving by the end of the financial year means they will be included in the next year's CSOFP.
HE
Herschel
1 year ago
I think you're right, the subsidiary should debit the inventory account.
JE
Jennifer
1 year ago
Hmm, this question is making my head spin. I think I need to consult the accounting gods for guidance on this one. Maybe they can send me a sign in the form of a calculator or a really sharp pencil.
NE
Nenita
1 year ago
I'm pretty confident that the correct answers are B, E, and G. The subsidiary should debit the inventory account, and the parent company should debit the payables account and credit the receivables account. That seems to make the most sense to me.
BO
Bok
1 year ago
That makes sense. So the correct answers are B, E, and G.
DA
Dana
1 year ago
Yes, and the parent company should debit the payables account and credit the receivables account.
JO
Jolene
1 year ago
I think you're right. The subsidiary should debit the inventory account.
WI
Willetta
2 years ago
Wow, this is a complex question. I'm not sure about the right answer, but I think it has something to do with the timing of the transaction and how it affects the accounts. Maybe I should re-read the question a few times to make sure I understand it.
JI
Jina
1 year ago
I'm not sure about the other statements, maybe we should carefully review the question again.
RO
Rocco
1 year ago
I believe 150,000 worth of inventory will be debited into the subsidiary's inventory account.
DE
Devora
1 year ago
I think the adjustments need to be accelerated to include them in the consolidation of assets for the CSOFP for 20X4.
JI
Jina
2 years ago
Hmm, this is a tricky one. I think the correct answers are B, C, and F. The subsidiary should debit the inventory account, and since the goods haven't arrived, they'll be included in the next year's CSOFP. And the payables account of the subsidiary should be credited.
NI
Nikita
1 year ago
That makes sense. It's important to accurately account for these transactions in the consolidation process.
YA
Yasuko
1 year ago
So, the payables account of the subsidiary should be credited with 150,000.
FL
Floyd
1 year ago
Yes, and since the goods haven't arrived by the end of the financial year, they will be included in the CSOFP for the next year.
RO
Royal
1 year ago
I think you're right, the subsidiary should debit the inventory account for 150,000 worth of goods.
DE
Derrick
2 years ago
I'm not sure about option A. I think option B might also be true because the inventory should be debited into the subsidiary's account.
WA
Wayne
2 years ago
I agree with Sheridan. Option A seems like the correct approach to take in this situation.
SH
Sheridan
2 years ago
I think option A is true because we need to resolve the disagreement quickly for the CSOFP.