Advanced Financial Accounting
11th Edition
ISBN: 9780078025877
Author: Theodore E. Christensen, David M Cottrell, Cassy JH Budd Advanced Financial Accounting
Publisher: McGraw-Hill Education
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Question
Chapter 6, Problem 6.3.3E
To determine
Intercompany transactions:
Consolidated financial statements are prepared by a parent company to consolidate the assets and liabilities of the parent and its subsidiaries. There may be some transactions between these companies which are called intercompany transactions.
To choose the amount of consolidated net income assigned to the controlling shareholders.
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Fromage purchased 80% of the equity shares in Frais on 1 January 20X1. During the year ended 31
December 20X1, Fromage sold inventory to Frais at a sales price of £50,000. None of the goods remained
in Frais' inventory. Fromage applied a margin of 20%.
Extracts from the statement of profit or loss for the two entities are shown below:
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£000
£000
Revenue
1,000
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Cost of sales
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What would be the revenue and cost of sales figures reported in the consolidated statement of
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Answer to the nearest £000
a.
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O b. Revenue 1750 Cost of sales 910
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K Company owns 100% of E Company. During the year, Kianapurchased inventory from Elyssa at a mark-up of 20% based on cost.How should the group compute for consolidated cost of sales?a. Cost of Sales of K + Cost of Sales of E– intercompany sales + Realized profit in beginning inventory – Unrealized profit in ending inventory.b. Cost of Sales of K + Cost of Sales of E – intercompany sales – Realized profit in beginning inventory + Unrealized profit in ending inventory.c. Cost of Sales of Kiana + Cost of Sales of Elyssa – Intercompany sales d. Cost of Sales of K + Cost of Sales of E
Lorn Corporation purchased inventory from Dresser Corporation for P 120,000 on September 20, 20x2, and resold 80% of the purchased inventory to unaffiliated companies prior to December 31, 20x2, for P140,000. Dresser produced the inventory sold to Lorn for P75,000. Lorn owns 70% of Dresser’s voting common stock. The companies had no other transactions during 20x2.
What amount of cost of goods sold will be reported in the 20x2 consolidated income statement?
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B. P75, 000
C. P96, 000
D. P120, 000
E. P171, 000
Chapter 6 Solutions
Advanced Financial Accounting
Ch. 6 - Why must inventory transfers to related companies...Ch. 6 - Why is there a need for a consolidation entry when...Ch. 6 - Prob. 6.3QCh. 6 - How do unrealized intercompany profits on a...Ch. 6 - How do unrealized intercompany profits on an...Ch. 6 - Prob. 6.6QCh. 6 - Prob. 6.9QCh. 6 - Prob. 6.10QCh. 6 - How is the amount of consolidated retained...Ch. 6 - How will the elimination of unrealized...
Ch. 6 - Prob. 6.14QCh. 6 - Is an inventory sale from one subsidiary to...Ch. 6 - Prob. 6.16QCh. 6 - Prob. 6.1.1ECh. 6 - Prob. 6.1.2ECh. 6 - MultipleChoice Questions on Intercompany Inventory...Ch. 6 - MultipleChoice Questions on Intercompany Inventory...Ch. 6 - Prob. 6.1.5ECh. 6 - Prob. 6.1.6ECh. 6 - Prob. 6.3.1ECh. 6 - Prob. 6.3.2ECh. 6 - Prob. 6.3.3ECh. 6 - Prob. 6.4.1ECh. 6 - Prob. 6.4.2ECh. 6 - Prob. 6.4.3ECh. 6 - Prob. 6.4.4ECh. 6 - Prob. 6.5.1ECh. 6 - Prob. 6.5.2ECh. 6 - Prob. 6.5.3ECh. 6 - Prob. 6.7ECh. 6 - Prob. 6.8ECh. 6 - Prob. 6.9ECh. 6 - Prob. 6.10ECh. 6 - Prob. 6.11ECh. 6 - Prob. 6.12ECh. 6 - Prob. 6.13ECh. 6 - Prob. 6.15ECh. 6 - Prior-Period Inventory Profits Home Products...Ch. 6 - Prob. 6.17PCh. 6 - Prob. 6.18PCh. 6 - Prob. 6.19PCh. 6 - Prob. 6.20PCh. 6 - Prob. 6.21PCh. 6 - Prob. 6.22PCh. 6 - Prob. 6.24PCh. 6 - Prob. 6.26PCh. 6 - Prob. 6.27PCh. 6 - Prob. 6.28PCh. 6 - Prob. 6.29PCh. 6 - Prob. 6.30PCh. 6 - Prob. 6.31PCh. 6 - Prob. 6.33PCh. 6 - Prob. 6.34PCh. 6 - Prob. 6.35APCh. 6 - Prob. 6.36AP
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