Avoid plagiarism, the work should be in your own words, copying from students or otherresources without proper referencing will result in ZERO marks. No exceptions.
All answers must be typed using Times New Roman (size 12, double-spaced) font.
(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 Stubben’s net income in 2005 was $80,000, and Parker’s income, excluding
its income from Stubben, was $100,000.
o Parker’s 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
Direct Exchange
Rate
Indirect Exchange
Rate
December 31,
2022
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)
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