Question

E6.11 Consolidated Income Statement, Intercompany Transactions Condensed income state ments for Pon and its 80 percent-owned subsidiary, Star, appear below Condensed Income Statements Pon Star (600,000) Intercompany sales are S1,500,000. Unconfirmed intercompany profit in Pon's beginning inventory is $100,000, and unconfirmed intercompany profit in Pon's ending inventory is $120,000. Unconfirmed intercompany profit in Star's beginning inventory is $90,000, and unconfirmed intercompany profit in Star's ending inventory is $50,000. At the date of combination four years ago, previously unrecorded identifiable intangibles (8-year life, straight-line) of $800,000 were recognized. Because the acquisition cost included a control premium, total goodwill recognized at the date of acquisition is shared with the noncontrolling interest in a 90:10 ratio. This year's goodwill impairment loss is $250,000 Required a. Prepare a schedule to compute Pon's equity in net income and the noncontrolling interest in net ncome b. Prepare a condensed consolidated income statement for Pon and Star

Answer 1

Answer Page No 0 Schedule the comparte por la coqueling og net income and non - controlling interest het income Particular Amount sales $4,000,000 Corol of goods sold ($ 2500,000) Other expense ($600,000) Depreciation ($100,000) Goodwill amortisation : C$ 250,000) Net income $ 550,000 ishare of Pon's ($440,000) Non-controlling Interest share $110,000 Depreciation = $800,000 Byears life = $100,000 · Share of Pools = $550,000 X 80% owned subsidiary 3$ 440,000

Page. No @ ® Condensed canzolidated income statement for ಇd Sta Particular Sales Cost of sales . Amount $11,520,000 ($8500,000) ($ 2600,000) ($100,000 $ 250,000) Other expenses Depreciation Goodwill amortization Net income $ 70,000 Sales = ($9000,000 + 4000,000) — 1500,000+(100,000 - 12000 +(90,000 - 50,000) - 13000,000 -- 1500,000 + (--20,000) + 40,000 = $ 11520000 cost of sales = 6000,000 + 2500,000 = $ 8500,000 Other expense = '2000,000 + 600,000 = $2600,000 Depreciation - 300,000 = $100,000