ACCT 302 Saudi Electronic University Disadvantage of Partnership Questions

College of Administration and Finance SciencesAssignment (1)
Deadline: Saturday 03/June/2023 @ 23:59
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, copying from students or other resources without proper referencing
will result in ZERO marks. No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism.
(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?
College of Administration and Finance Sciences
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 December 31, 2022
Direct Exchange
Rate
Indirect Exchange
Rate
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)