Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Chapter 5, Problem 3Q
To determine
Determine the amount of intra-entity profit which remains in Company S’s inventory at year-end.
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Tala Co. owns an 80% interest in Kilometro Inc., acquired several years ago. Kilometro regularly sells merchandise to its parent at 125% of its cost. Gross profit data of Tala and Kilometro for the year 2018 are:
Sales
Tala- 2,500,000
Kilometro- 1,800,000
Cost of Sales
Tala 1,800,000
Kilometro- 1,240,000
During 2018, Tala purchased inventory items from Kilometro at a transfer price of 400,000. Tala December 31, 2017 and 2018 inventories were 500,000 and 600,000 respectively, which included goods acquired from Kilometro of 125,000 and 100,000 respectively. The inventory of Kilometro at the beginning and end of 2018 were 350,000 and 400,000 respectively. As of December 31, 2018, 60% of the year's shipment is not yet paid by Tala.
1. What is the consolidated cost of sales?
2. What amount of Inventory is reported in the consolidated balance sheet at December 31, 2018?
Tala Co. owns an 80% interest in Kilometro Inc., acquired several years ago. Kilometro regularly sells merchandise to its parent at 125% of its cost. Gross profit data of Tala and Kilometro for the year 2018 are:SalesTala- 2,500,000Kilometro- 1,800,000Cost of SalesTala- 1,800,000Kilometro- 1,240,000During 2018, Tala purchased inventory items from Kilometro at a transfer price of 400,000. Tala December 31, 2017 and 2018 inventories were 500,000 and 600,000 respectively, which included goods acquired from Kilometro of 125,000 and 100,000 respectively. The inventory of Kilometro at the beginning and end of 2018 were 350,000 and 400,000 respectively. As of December 31, 2018, 60% of the year’s shipment is not yet paid by Tala.what amount of inventory is reported in the consolidated balance sheet at December 31, 2018?
Gaffney Corporation is a wholesale distributor of auto parts and uses the cash method of accounting. The company's sales have been about
$11,175,000 per year for the last few years. However, Gaffney has the opportunity to acquire an unincorporated competitor with annual
sales of $12,292,500.
Complete the following paragraph regarding the accounting implications of acquiring the competitor.
For the year of acquisition. Gaffney and the acquired business will be treated as o single business
consider the combined gross receipts of both businesses in determining if the average annual gross receipts for the prior three-year period
EV.Gaffney must Y
exceed $
statutory threshold. Therefore, Gaffney will likely be able to continue using the cash method
EV for
the year of the acquisition.
Chapter 5 Solutions
Advanced Accounting
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - James, Inc., sells inventory to Matthews Company,...Ch. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Prob. 6PCh. 5 - Prob. 8PCh. 5 - Prob. 11PCh. 5 - What is the total of consolidated cost of goods...Ch. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - Prob. 15PCh. 5 - What is the consolidated total for inventory at...
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