Homework Answers
Answer to Ques 3:
| P | S | Consolidated | |
| Sales | 1000 | 1900 | 1300 |
| CGS | 600 | 1000 | 600 |
| Gross Profit | 400 | 900 | 700 |
| Equity income(loss) | 400 | 900 | 700 |
| Net effect on total income | 400 | 900 | 700 |
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Exercise A9-1: Intercompany inventory transfers with no IIP: An intuitive example P owns 100 percent of...
Preparing a consolidated income statement-Cost method with noncontrolling interest, AAP and upstream and downstream intercompany inventory...
Preparing a consolidated income statement-Cost method with noncontrolling interest, AAP and upstream and downstream intercompany inventory profits A parent company purchased a 70% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $300,000 in excess of the subsidiary's Stockholders' Equity on the acquisition date. This excess was assigned to a building that was estimated to be undervalued by $180,000 and to an unrecorded Trademark valued at $120,000. The building asset...
Upstream versus downstream inventory profits and net income attributable to the noncontrolling interest Assume that on...
Upstream versus downstream inventory profits and net income attributable to the noncontrolling interest Assume that on January 1, 2012, a parent company acquired a 90% interest in a subsidiary's voting common stock. On the date of acquisition, the fair value of the subsidiary's net assets equaled their reported book values. There were no intercompany sales during 2012. During the year ended December 31, 2013, the companies made $300,000 of intercompany sales. All intercompany sales include profits of 30% of selling...
Preparing a consolidated income statement—Cost method with noncontrolling interest, AAP and upstream and downstream intercompany inventory...
Preparing a consolidated income statement—Cost method
with noncontrolling interest, AAP and upstream and downstream
intercompany inventory profits
A parent company purchased a 70% controlling interest in its
subsidiary several years ago. The aggregate fair value of the
controlling and noncontrolling interest was $300,000 in excess of
the subsidiary’s Stockholders’ Equity on the acquisition date. This
excess was assigned to a building that was estimated to be
undervalued by $180,000 and to an unrecorded Trademark valued at
$120,000. The building asset...
P Company acquired 75 percent of S Company on January 1, 2018 at book value. During...
P Company acquired 75 percent of S Company on January 1, 2018 at book value. During 2018, S purchased inventory for $40,000 and sold it to P for $60,000. Of this amount, P reported $12,000 in ending inventory in 2018 and later sold it in 2019. In 2019, P sold inventory it had purchased for $35,000 to S for $50,000. S sold $45,000 of this inventory in 2019. In 2019, P reported stand-alone income of $870,000 and S reported total...
Intercompany Transactions – Equity Method 60 points Parent purchased 100% of a Subsidiary on January 1,...
Intercompany Transactions – Equity Method 60 points Parent purchased 100% of a Subsidiary on January 1, 2020. The excess of investment cost over book value of $350,000 was allocated entirely to a 7-year royalty agreement. The parent uses the equity method to account for its investment in its subsidiary. In 2021, Subsidiary sold to Parent land having a book value of $90,000 for a total price of $244,000. On January 2, 2022, Parent sold equipment to Subsidiary for $120,000. The...
16. Governmental Accounting. On July 1, 20x8, Cleveland established a capital projects fund to con town hall. Financing...
16. Governmental Accounting. On July 1, 20x8, Cleveland established a capital projects fund to con town hall. Financing for construction came from the following sources (1) Transfer from the general fund (2) Revenue from state grant 3) Proceeds of general obligation bonds 2,000,000 1,000,000 11500.000 Construction of the town hall was completed on June 15, 20x9. For the fiscal year ended June 30, 20x9, what aiouht hould Cleveland's capital projects fund report for revenues on its statement of revenues, expenditur...
Consolidation spreadsheet for continuous sale of inventory - Equity method Assume that a parent c...
Consolidation spreadsheet for continuous sale of inventory - Equity method Assume that a parent company acquired a subsidiary on January 1, 2010. The purchase price was 500,000 million in excess of the subsidiary's book value of Stockholders' Equity on the acquisition date and that excess was assigned to the following AAP assets Original Original Useful Amount Life (years) AAP Asset Property, plant and equipment (PPE), net Customer list Royalty agreement Goodwill $100,000 185,000 115,000 100,000 $500,000 20 indefinite The AAP...
please answer all Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in...
please answer all
Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $405,000 in cash. The subsidiarys stockholders' equity accounts totaled $389,000 and the noncontrolling interest had a fair value of $45,000 on that day. However a building (with a nine-year remaining life) in Brey's accounting records was undervalued by $27,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (four year remaining life) Brey reported net...
Use negative signs with answers in the Consolidated column for Cost of goods sold, Operating expenses...
Use negative signs with answers in the
Consolidated column for Cost of goods sold, Operating expenses and
Dividends.
Parent Subsidiary Subsidiary Balance sheet $800,000 Assets (480,000) Cash 320,000 Accounts receivable Parent Income statement Sales $4,350,000 Cost of goods sold (3,050,000) Gross profit 1,300,000 Income (loss) from subsidiary 15,000 Operating expenses (830,000) Net income $485,000 Statement of retained earnings BOY retained earnings | $2,000,000 Net income 485,000 Dividends (125,000) Ending retained earnings $2,360,000 - Inventory (200,000) Equity investment $120,000 Property, plant...
c. Complete the consolidating entries according to the C-E-A-D-I sequence and complete the consolidation worksheet. Use...
c. Complete the consolidating entries according to the
C-E-A-D-I sequence and complete the consolidation
worksheet.
Use negative signs with answers in the
Consolidated column for Cost of goods sold, Operating expenses and
Dividends.
Consolidation Worksheet
Income statement
Parent
Subsidiary
Debit
Credit
Consolidated
Sales
$3,045,000
$560,000
[Isales]
Answer
Answer
Cost of goods sold
(2,135,000)
(336,000)
[Icogs]
Answer
Answer
[Icogs]
Answer
Answer
[Isales]
Gross profit
910,000
224,000
Answer
Equity income
10,500
-
[C]
Answer
Answer
Operating expenses
(581,000)
(140,000)
[D]
Answer
Answer...
Preparing a consolidated income statement-Cost method with noncontrolling interest, AAP and upstream and downstream intercompany inventory profits A parent company purchased a 70% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $300,000 in excess of the subsidiary's Stockholders' Equity on the acquisition date. This excess was assigned to a building that was estimated to be undervalued by $180,000 and to an unrecorded Trademark valued at $120,000. The building asset...
Upstream versus downstream inventory profits and net income attributable to the noncontrolling interest Assume that on January 1, 2012, a parent company acquired a 90% interest in a subsidiary's voting common stock. On the date of acquisition, the fair value of the subsidiary's net assets equaled their reported book values. There were no intercompany sales during 2012. During the year ended December 31, 2013, the companies made $300,000 of intercompany sales. All intercompany sales include profits of 30% of selling...
Preparing a consolidated income statement—Cost method
with noncontrolling interest, AAP and upstream and downstream
intercompany inventory profits
A parent company purchased a 70% controlling interest in its
subsidiary several years ago. The aggregate fair value of the
controlling and noncontrolling interest was $300,000 in excess of
the subsidiary’s Stockholders’ Equity on the acquisition date. This
excess was assigned to a building that was estimated to be
undervalued by $180,000 and to an unrecorded Trademark valued at
$120,000. The building asset...
16. Governmental Accounting. On July 1, 20x8, Cleveland established a capital projects fund to con town hall. Financing for construction came from the following sources (1) Transfer from the general fund (2) Revenue from state grant 3) Proceeds of general obligation bonds 2,000,000 1,000,000 11500.000 Construction of the town hall was completed on June 15, 20x9. For the fiscal year ended June 30, 20x9, what aiouht hould Cleveland's capital projects fund report for revenues on its statement of revenues, expenditur...
Consolidation spreadsheet for continuous sale of inventory - Equity method Assume that a parent company acquired a subsidiary on January 1, 2010. The purchase price was 500,000 million in excess of the subsidiary's book value of Stockholders' Equity on the acquisition date and that excess was assigned to the following AAP assets Original Original Useful Amount Life (years) AAP Asset Property, plant and equipment (PPE), net Customer list Royalty agreement Goodwill $100,000 185,000 115,000 100,000 $500,000 20 indefinite The AAP...
please answer all
Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $405,000 in cash. The subsidiarys stockholders' equity accounts totaled $389,000 and the noncontrolling interest had a fair value of $45,000 on that day. However a building (with a nine-year remaining life) in Brey's accounting records was undervalued by $27,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (four year remaining life) Brey reported net...
Use negative signs with answers in the
Consolidated column for Cost of goods sold, Operating expenses and
Dividends.
Parent Subsidiary Subsidiary Balance sheet $800,000 Assets (480,000) Cash 320,000 Accounts receivable Parent Income statement Sales $4,350,000 Cost of goods sold (3,050,000) Gross profit 1,300,000 Income (loss) from subsidiary 15,000 Operating expenses (830,000) Net income $485,000 Statement of retained earnings BOY retained earnings | $2,000,000 Net income 485,000 Dividends (125,000) Ending retained earnings $2,360,000 - Inventory (200,000) Equity investment $120,000 Property, plant...
c. Complete the consolidating entries according to the
C-E-A-D-I sequence and complete the consolidation
worksheet.
Use negative signs with answers in the
Consolidated column for Cost of goods sold, Operating expenses and
Dividends.
Consolidation Worksheet
Income statement
Parent
Subsidiary
Debit
Credit
Consolidated
Sales
$3,045,000
$560,000
[Isales]
Answer
Answer
Cost of goods sold
(2,135,000)
(336,000)
[Icogs]
Answer
Answer
[Icogs]
Answer
Answer
[Isales]
Gross profit
910,000
224,000
Answer
Equity income
10,500
-
[C]
Answer
Answer
Operating expenses
(581,000)
(140,000)
[D]
Answer
Answer...
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