Posey Manufacturing Company acquired 90% of Stargell Corporation’s outstanding common stock on December 31, 20X5, for...
| Posey Manufacturing Company acquired 90% of Stargell Corporation’s outstanding common stock on December 31, 20X5, for $1,116,900. At that date, the fair value of the noncontrolling interest was $124,100, and Stargell reported common stock outstanding of $487,000, premium on common stock of $267,000, and retained earnings of $407,000. The book values and fair values of Stargell’s assets and liabilities were equal except for land, which was worth $30,000 more than its book value. |
Since the date it was acquired by Posey Manufacturing, Stargell has sold inventory to Posey on a regular basis. The amount of such intercompany sales totaled $67,000 in 20X6 and $83,000 in 20X7, including a 30% gross profit. All inventory transferred in 20X6 had been resold by December 31, 20X6, except inventory for which Posey had paid $18,000 and did not resell until January 20X7. All inventory transferred in 20X7 had been resold at December 31, 20X7, except merchandise for which Posey had paid $16,667
The question is how to calculate inventory sale deferred gross profit in 20X7.
Homework Answers
|
At the end of the fiscal year: when a portion of the goods are not
consumed or resold to unrelated parties: This portion of intra-entity profits/gains/losses should be deferred. |
|||
| Inventory lying unsold as at December 31, 20X7 | 16,667 | ||
| Gross profit @ | 30% | 5,000 | =deferred profit on sale, will be recognized when resold |
| Net Inventory at cost | 11,667 | ||
| When the
goods are subsequently consumed or resold to unrelated
parties: The deferred profits/gains/losses should be recognized in the same period. |
|||
| Inventory lying unsold as at December 31, 20X6 | 18,000 | ||
| Gross profit @ | 30% | 5,400 | =deferred profit on sale in 20X6, will now be recognized in January 20X7 |
Add Answer to:
Posey Manufacturing Company acquired 90% of
Stargell Corporation’s outstanding common stock on December 31,
20X5, for...
On December 31, 20X7, trial balances for Posey and Stargell appeared as follows: Posey Company Stargell...
On December 31, 20X7, trial balances for Posey and Stargell appeared as follows: Posey Company Stargell Corporation Item Credit Debit Credit Debit Cash $ $ 39,000 49,500 Current Receivables 121,500 90,100 Inventory 317,000 364,900 Investment in Stargell Stock Investment in Stargell Bonds Investment in Posey Bonds 1,243,800 985,000 200,000 Land 518,000 1,241,000 Buildings and Equipment 1,915,000 2,940,000 Cost of Goods Sold 426,000 1,829,000 Depreciation & Amortization Other Expenses 184,000 65,000 632,000 206,000 51,000 Dividends Declared 61,000 $ $1,050,000 597,000 213,000...
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POSEY MANUFACTURING COMPANY AND SUBSIDIARY Consolidated Financial Statement Worksheet December 31, 20X7 Consolidation Entries Posey Co. Stargell Corp. DR CR Consolidated Income Statement Sales Other Income Less: COGS Less: Depr. & Amort. Expense Less: Other Expenses Goodwill Impairment Loss Gain on Bond Retirement Income from Stargell Corp. Consolidated Net Income NCI in Net Income Controlling Interest in NI Statement of Retained Earnings Beginning Balance Net Income Less: Dividends Declared Ending Balance Balance Sheet Assets Cash Current Receivables Inventory Land Buildings...
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The question is how to calculate the investment in Stargell
Corporation?
FINANCIAL INFORMATION FOR THIS MILESTONE Refer to Trial Balance 2017 information (red tab) Posey Manufacturing Company acquired 90% of Stargell Corporation's outstanding common stock on December 31, 20X5, for $1,116,900. At that date, the fair value of the noncontrolling interest was $124, 100, and Stargell reported common stock outstanding of $487,000, premium on common stock of $267,000, and retained earnings of $407,000. The book values and fair values of...
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a. How much did Pie pay to purchase its shares of Slice?
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