A wholly-owned subsidiary reports income of $2 million and an other comprehensive loss of $100,000. The subsidiary's revalued net assets consist of indefinite life identifiable intangible assets. Impairment testing for the year reveals $250,000 in impairment on these intangibles. The subsidiary did not declare any dividends. Eliminating entry (C) reduces Investment in Subsidiary by: A. $1,650,000. B. $2,000,000. C. $1,950,000. D. $1,750,000.

Question

Mathematics

Karly Baird

23 March, 22:46

A wholly-owned subsidiary reports income of $2 million and an other comprehensive loss of $100,000. The subsidiary's revalued net assets consist of indefinite life identifiable intangible assets. Impairment testing for the year reveals $250,000 in impairment on these intangibles. The subsidiary did not declare any dividends. Eliminating entry (C) reduces Investment in Subsidiary by: A. $1,650,000. B. $2,000,000. C. $1,950,000. D. $1,750,000.

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Raphael Vargas · Answer 1

a. $1650000

Step-by-step explanation:

an eliminating entry will contain the adjustment of any comprehensive loss and the impairment of assets as to show the fair market value of the companies assets so if a company invests in a subsidiary it needs to invest on market

value every asset and income that is adjusted to any comprehensive loss so to calculate the investment we say:

investment in subsidiary = income - comprehensive loss - impairment of assets

= $2000000 - $100000 - $250000

=$1650000