The following accounts are as they appear in the respective general ledgers of a parent and its 100%-owned subsidiary (created in 2001) at 12/31/06 (prior to the parent's final year-end adjustments and closing procedures relating to the application of the equity method of accounting):
Required:
What accounts and related balances pertaining to the subsidiary should appear in the parent's separate balance sheet at 12/31/06 under each of the following assumptions?
a. The parent has guaranteed none of the subsidiary's debt.
b. The parent has guaranteed all of the subsidiary's debt.
c. The parent has guaranteed $10,000 of the subsidiary's debt on a pro rata basis.

Question

The following accounts are as they appear in the respective general ledgers of a parent and its 100%-owned subsidiary (created in 2001) at 12/31/06 (prior to the parent's final year-end adjustments and closing procedures relating to the application of the equity method of accounting):
  Required:
What accounts and related balances pertaining to the subsidiary should appear in the parent's separate balance sheet at 12/31/06 under each of the following assumptions?
a. The parent has guaranteed none of the subsidiary's debt.
b. The parent has guaranteed all of the subsidiary's debt.
c. The parent has guaranteed $10,000 of the subsidiary's debt on a pro rata basis.

Quizplus · Accepted Answer

The Answer of The following accounts are as they appear in the respective general ledgers of a parent and its 100%-owned subsidiary (created in 2001) at 12/31/06 (prior to the parent's final year-end adjustments and closing procedures relating to the application of the equity method of accounting):
  Required:
What accounts and related balances pertaining to the subsidiary should appear in the parent's separate balance sheet at 12/31/06 under each of the following assumptions?
a. The parent has guaranteed none of the subsidiary's debt.
b. The parent has guaranteed all of the subsidiary's debt.
c. The parent has guaranteed $10,000 of the subsidiary's debt on a pro rata basis.

The Following Accounts Are as They Appear in the Respective