Asked by Kevin Lawson on Apr 25, 2024
Verified
What adjustment should be made to the consolidated financial statements for the year ended December 31, 20X4, with respect to the $10,000 fair value adjustment to inventory?
A) An adjustment should be made through opening retained earnings.
B) An adjustment should be made to cost of sales.
C) No adjustment is required as an adjustment would have already been made to inventory at the time of sale.
D) No adjustment is required as an adjustment would have already been made to cost of sales at the time of sale.
Fair Value Adjustment
An accounting process of updating the reported value of an asset or liability to reflect its current market value.
Consolidated Financial Statements
Financial reports that combine the financial results of a parent company and its subsidiaries into a single statement, showing the overall financial health of the group.
Inventory
Assets held for sale in the ordinary course of business, or materials and supplies that are used in the production process to manufacture goods.
- Become familiar with the mechanisms of consolidation, particularly the eradication of unrealized profits in transactions within the corporate group.
- Ascertain and adjust the just values of assets and liabilities acquired in business amalgamations.
Verified Answer
Learning Objectives
- Become familiar with the mechanisms of consolidation, particularly the eradication of unrealized profits in transactions within the corporate group.
- Ascertain and adjust the just values of assets and liabilities acquired in business amalgamations.
Related questions
Inventory Was Acquired as Part of a Business Combination at ...
The Trial Balances of Ash Inc Other Information:Ash Acquired ...
Sonic Enterprises Inc Has Decided to Purchase 100% of the ...
On April 1, 2019, the Balance Sheets of Optimum Inc ...
For Acquisition Accounting, Why Are Assets and Liabilities of the ...