Assume a parent company acquired its subsidiary on January 1, 2016. On January 1, 2016, the subsidiary's retained earnings was $637,500. During the year ended December 31, 2019, the subsidiary sold $ 100,000 of inventory to its parent, of which $30,000 remains unpaid at December 31, 2019. Deferred profit at December 31, 2018, equaled $12,000, with all of these inventories sold to unaffiliated companies in 2019. Deferred profit at December 31, 2019, equals $22,400. The parent uses the cost method of pre- consolidation Equity Investment book-keeping. The subsidiary's retained earnings on January 1, 2019 and December 31, 2019 are $775,000 and $955,000, respectively. Calculate the amount of the [ADJ] consolidation entry to be included in the 2019 consolidation worksheet.

Assume a parent company acquired its subsidiary on January 1, 2016. On January 1, 2016, the subsidiary's retained earnings was $637,500. During the year ended December 31, 2019, the subsidiary sold $ 100,000 of inventory to its parent, of which $30,000 remains unpaid at December 31, 2019. Deferred profit at December 31, 2018, equaled $12,000, with all of these inventories sold to unaffiliated companies in 2019. Deferred profit at December 31, 2019, equals $22,400. The parent uses the cost method of pre- consolidation Equity Investment book-keeping. The subsidiary's retained earnings on January 1, 2019 and December 31, 2019 are $775,000 and $955,000, respectively. Calculate the amount of the [ADJ] consolidation entry to be included in the 2019 consolidation worksheet.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 2P

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Assume a parent company acquired its subsidiary on January 1, 2016. On January 1, 2016, the subsidiary’s retained earnings was $637,500. During the year ended December 31, 2019, the subsidiary sold $100,000 of inventory to its parent, of which $30,000 remains unpaid at December 31, 2019. Deferred profit at December 31, 2018, equaled $12,000, with all of these inventories sold to unaffiliated companies in 2019. Deferred profit at December 31, 2019, equals $22,400. The parent uses the cost method of pre-consolidation Equity Investment book-keeping. The subsidiary's retained earnings on January 1, 2019 and December 31, 2019 are $775,000 and $955,000, respectively. Calculate the amount of the [ADJ] consolidation entry to be included in the 2019 consolidation worksheet.
During 2019, Subsidiary company, Sim had reported a net income $ 41,600 and declared dividends $ 12,000. The current amortization of acquisition price is $ 3,600. Intercompany sales from Subsidiary to Parent company, during 2019 were $ 2,600. Intercompany profit in ending inventory is $ 2,400 and intercompany profit in beginning inventory $ 1,200. Parent Company Pal had acquired 80% of subsidiary, Sim. What is the share of NCI in Subsidiarys net income for the year 2019? Select one: O a. 7,200 O b. 7,300 O c. 7,360 O d. 7,400
On January 1, 2021, PCO purchased 70% ownership of SCO which resulted to a gainon acquisition of P100,000. Net assets of SCO were fairly valued except for inventorywhich was understated by P1,500,000. A third of these inventories remained unsoldas of the end of the calendar year.The operations of the two companies for 2021 are as follows:PCO SCOSales P3,100,000 P2,600,000(COGS) (1,300,000) (1,250,000)Gross profit 1,800,000 1,350,000(OPEX) (200,000) (150,000)1,550,0003,550,0001,850,0003,250,000Other income 0 200,000(Other expenses) (120,000) 0Net income P1,480,000 P 400,000In the consolidated statement of comprehensive income for the year endedDecember 31, 2021, how much is the cost of goods sold? A. 1,550,000B. 3,550,000C. 1,850,000D. 3,250,000 based on the information above, In the consolidated statement of comprehensiveincome for the year ended December 31, 2021, how much is the consolidated netincome attributable to the controlling interest? 1,830,0001,980,0001,760,0001,860,000
The following transactions occurred for the period ended regarding LL and its two subsidiaries L1 and L2: On January 1, 2020, LL acquired 60% of the outstanding common stocks of L1. On April 1, 2020, LL acquired 70% of the outstanding common stocks of L2. It is the policy of LL to account all its investment in subsidiary using cost method in its separate financial statements On May 1, 2020, LL sold inventory to L2 at a price of P100,000. On June 1, 2020, L2 resold the inventory coming from LL at a price of P150,000 as follows: 80% to unrelated parties and 20% to L1. On July 1, 2020, L1 sold a new set of inventory to L2 at a price of P200,000. On august 1, 2020, L2 resold the inventory coming from L1 at a price of P300,000 as follows: 40% to unrelated parties and 60% to LL. For the period ended December31, 2020, the affiliates reported the following sales revenue in their separate income statement: o LL – Sales Revenue P3,000,000 o…
On January 1, 2021, PCO purchased 70% ownership of SCO which resulted to a gain on acquisition of P100,000. Net assets of SCO were fairly valued except for inventory which was understated by P1,500,000. A third of these inventories remained unsold as of the end of the calendar year. The operations of the two companies for 2021 are as follows: PCO SCO Sales P3,100,000 P2,600,000 (COGS) (1,300,000) (1,250,000) Gross profit 1,800,000 1,350,000 (OPEX) (200,000) (150,000) Other income 0 200,000 (Other expenses) (120,000) 0 Net income P1,480,000 P 400,000 In the consolidated statement of comprehensive income for the year ended December 31, 2021, how much is the cost of goods sold? Group of answer choices a.1,850,000 b.3,550,000 c.1,550,000 d.3,250,000
On August 31, 2020, Southampton Co. acquired all of the common stock of Brighton Company, which became a division of Southampton Co. Brighton Company reported the followir statement of financial position at the time of the acquisition: Brighton Company Statement of Financial Position Assets Equity and Liabilities Share capital- Plant assets (ne t) $1,350,000 $1,150,000 ordinary 235,000 Retained earnings Inventory Receivables 1,070,000 587.000 800,000 Accounts payable Cash 422.000 Total assets $2.807.000 Total equity and liabilities $2.807.000 An appraisal indicated that the fair value of the inventory was $372,000 and the fair value of the plant assets was $1,550,000. The agreed purchase price was $3,600,000, and this amount was paid in cash to the previous owners of Brighton Company. Required: a. Prepare the entry to record the purchase of Brighton Company. b. Assume that the carrying amount of Brighton Company division's net assets, including goodwill is $2.550,000. The recoverable…
On January 1, 2021, PCO purchased 70% ownership of SCO which resulted to a gain on acquisition of P100,000. Net assets of SCO were fairly valued except for inventory which was understated by P1,500,000. A third of these inventories remained unsold as of the end of the calendar year. The operations of the two companies for 2021 are as follows: PCO SCO Sales P3,100,000 P2,600,000 (COGS) (1,300,000) (1,250,000) Gross profit 1,800,000 1,350,000 (OPEX) (200,000) (150,000) Other income 0 200,000 (Other expenses) (120,000) 0 Net income P1,480,000 P 400,000 Q1: In the consolidated statement of comprehensive income for the year ended December 31, 2021, how much is the cost of goods sold? 1,550,000 1,850,000 3,550,000 3,250,000 Q2: based on the information above, In the consolidated statement of comprehensive income for the year ended December 31, 2021, how much is the consolidated net income attributable to…
Anderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 25% gross profit rate. The following data are available pertaining specifically to Philbin's intra-entity purchases from Anderson. Anderson was acquired on january 1, 2020. 2020 2021 2022 Purchases by Philbin Ending inventory on Philbin's books 1,200 4,000 $ ৪,000 5 12,000 $15.000 3,000 Assume the equity method is used. The following data are available pertaining to Anderson's income and dividends. 2020 2021 2022 $ 70,000 $ 85,000 $ 94,000 Dividends paid by Anderson 10,000 10,000 15,000 Anderson's net income Assuming there are no excess amortizations associated with the consolidation, and no other intra-entity asset transfers, compute the net income attributable to the noncontrolling interest of Anderson for 2022. O $9,400. $9,375. $9,425. $8,485. $9,325.
Anderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 25% gross profit rate. The following data are available pertaining specifically to Philbin’s intra-entity purchases from Anderson. Anderson was acquired on January 1, 2020. 2020 2021 2022 Purchases by Philbin $ 8,000 $ 12,000 $ 15,000 Ending inventory on Philbin’s books 1,200 4,000 3,000 Assume the equity method is used. The following data are available pertaining to Anderson’s income and dividends. 2020 2021 2022 Anderson’s net income $ 70,000 $ 85,000 $ 94,000 Dividends paid by Anderson 10,000 10,000 15,000 For consolidation purposes, what amount would be debited to January 1 retained earnings for the 2022 consolidation worksheet entry with regard to the unrecognized intra-entity gross profit remaining in ending inventory with respect to the 2021 intra-entity transfer of merchandise? Multiple Choice $3,000.…
Anderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 25% gross profit rate. The following data are available pertaining specifically to Philbin’s intra-entity purchases from Anderson. Anderson was acquired on January 1, 2020. 2020 2021 2022 Purchases by Philbin $ 8,000 $ 12,000 $ 15,000 Ending inventory on Philbin’s books 1,200 4,000 3,000 Assume the equity method is used. The following data are available pertaining to Anderson’s income and dividends. 2020 2021 2022 Anderson’s net income $ 70,000 $ 85,000 $ 94,000 Dividends paid by Anderson 10,000 10,000 15,000 For consolidation purposes, what amount would be debited to January 1 retained earnings for the 2020 consolidation worksheet entry with regard to the unrecognized intra-entity gross profit remaining in ending inventory with respect to the 2020 intra-entity transfer of merchandise?
In 2022, parent company sells inventory costing $60,000 fo to its 90% owned Subsidiary for $100,000.The sale was on account.20% of the inventory remained unsold until the following year 2023. 40% of the receivable was uncollected.In 2021 the parent company sold inventory costing $52,000 for $80,000.The subsidiary sold all of the inventory in 2021. Explain the necessary 2022 elimination entries in detail.
The following are several figures reported for Allister and Barone as of December 31, 2021: Inventory Sales Investment income Cost of goods sold Operating expenses Allister Barone $ 530,000 $ 330,000 860,000 1,060,000 not given 530,000 245,000 430,000 315,000 Allister acquired 90 percent of Barone in January 2020. In allocating the newly acquired subsidiary's fair value at the acquisition date, Allister noted that Barone had developed a customer list worth $62,000 that was unrecorded on its accounting records and had a four-year remaining life. Any remaining excess fair value over Barone's book value was attributed to goodwill. During 2021, Barone sells inventory costing $133,000 to Allister for $186,000. Of this amount, 10 percent remains unsold in Allister's warehouse at year-end. Determine balances for the following items that would appear on Allister's consolidated financial statements for 2021: