Separate company and consolidated financial statements for Pop Corporation and its only subsidiary, Sal Corporation, for 2012 are summarized here. Pop acquired its interest in Sal on January 1, 2011, at a price in excess of book value, which was due to an unrecorded patent.
REQUIRED: Answer the following questions about the financial statements of Pop and Sal.
1. What is Pop’s percentage interest in Sal Corporation? Provide a computation to explain your answer.
2. Does Pop use a one-line consolidation in accounting for its investment in Sal? Explain your answer.
3. Were there intercompany sales between Pop and Sal in 2012? If so, show computations.
4. Are there unrealized inventory profits on December 31, 2012? If so, show computations.
5. Provide computations to explain the difference between the combined separate cost of sales and consolidated cost of sales.
6. Explain the difference between combined separate and the consolidated “equipment—net” line item by reconstructing the workpaper entry(s) that was (were) apparently made.
7. Are there intercompany receivables and payables? If so, identify them and state the amounts.
8. Beginning with the noncontrolling interest at January 1, 2012, provide calculations of the $37,200 noncontrolling interest at December 31, 2012.
9. What was the amount of patents at December 31, 2011? Show computations.
10. Provide computations to explain the $305,800 Investment in Sal account balance on December 31, 2012.
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