Problems

ces Mc Graw H Problem 7-20 (Algo) (LO 7-5, 7-6) Martin has a controlling interest in Rowen's outstanding stock. At the current year-end, the following information has been accumulated for these two companies Martin Roven Separate Operating Income $555,000 (includes a $131,000 net gross profit in intra-entity ending inventory) 400,000 Martin uses the initial value method to account for the investment in Rowen. The separate operating income figures just presented include neither dividend nor other investment income. The effective tax rate for both companies is 21 percent. a. Assume that Martin owns 100 percent of Rowen's voting stock and is filing a consolidated tax return. What income tax amount does this affiliated group pay for the current period? a b le b. Assume that Martin owns 92 percent of Rowen's voting stock and is filing a consolidated tax return. What amount of income taxes does this affiliated group pay for the current period? d ● c. Assume that Martin owns 65 percent of…

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: Fromage Frais £000 £000 Revenue 1,000 750 Cost of sales (650) (250) What would be the revenue and cost of sales figures reported in the consolidated statement of profit or loss for the year ended 31 December 20X1? Answer to the nearest £000 a. Revenue 1700 Cost of sales 850 O b. Revenue 1750 Cost of sales 910 O c. Revenue 1700 Cost of sales 860 d. None of these options are correct Revenue 1550 Cost of sales 800

4 Peanut Company acquired 80 percent of Snoopy Company's outstanding common stock for $300,000 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $375,000. Peanut uses the eguity method to account for Investments. The following trial balance summarizes the financial position and operations for Peanut and Snoopy as of December 31, 20X9: Peanut Company Snoopy Company Credit Debit Credit Debit $ 272,000 $ 77,000 82, 000 Cash Accounts Receivable 200, eee Inventory 193,e00 319,800 216,e00 706,000 118,000 Investment in Snoopy Company Land 81,000 Buildings and Equipment 199, 000 155,000 13,000 54, 250 34,000 Cost of Goods Sold 375,000 Depreciation Expense Selling & Administrative Expense Dividends Declared 47,000 221,000 224,e00 $ 487,000 $ 39,e00 Accumulated Depreciation Accounts Payable Bonds Payable 55,000 39,e00 137,000 79,250 Common Stock Retained Earnings 491,000 682,400 187,e00 158,eee 319, e00 Sales 844,000 Income from Snoopy Company 77,400 Total $2,773,800…

4. Pate Corp. owns 80% of Strange Inc.’s common stock. During 20X1, Pate sold inventory to Strange for $600,000 on the same terms as sales made to outside customers. Strange sold the entire inventory purchased from Pate by the end of 20X1. Pate and Strange report the following for 20X1.     Pate   Strange Sales $ 2,700,000   $ 1,600,000 Cost of sales   1,800,000     900,000 Gross profit $ 900,000   $ 700,000     Required: What amount should Pate report as sales revenue in its 20X1 consolidated income statement? What amount should Pate report as cost of sales in its 20X1 consolidated income statement?       Amount a. Sales Revenue Amount $ b. Cost of sales amount $

Question Three P Co has owned 75% of the 100,000 shares of S Co since the incorporation of that company. During the year to 31 December 20X2, S Co sold goods costing GHS16,000 to P Co at a price of GHS20,000 and these goods were still unsold by P Co at the end of the year. Draft statements of financial position of each company at 31 December 20X2 were: Required: Prepare the consolidated statement of financial position of P Co at 31 December 20X2. The fair value of the non-controlling interest at acquisition was GHS25,000.

Alpha Company owns 80 percent of the voting stock of Beta Company. Alpha and Beta reported the following account information from their year-end separate financial records: Alpha Beta $95,000 $88,000 800,000 300,000 Cost of Goods Sold 600,000 180,000 Inventory Sales Revenue During the current year, Alpha sold inventory to Beta for $100,000. As of year end, Beta had resold only 60 percent of these intra-entity purchases. Alpha sells inventory to Beta at the same markup it uses for all of its customers. What is the total for consolidated cost of goods sold?

The following are select records from Kat and Dog as of Dec. 31st. All revenues, expenses, and dividends are assumed to occur evenly over the year. Kat acquired 70% of Dog earlier this year on July 1st. At the date of acquisition the only excess FMV item is a Trademark that is undervalued by $100 with a 5-year remaining life. KAT DOG REVENUES $ 800 $ 400 COGS 200 80 OTHER EXPENSES 400 100 DIVIDENDS 50 10 On the 12/31 Consolidated Financial Statements, what amounts will be reported for: 1. Revenues: 2. COGS: 3. Other expenses: 4. Dividends: 5. NCI in Net Income:

Subject: Corporate Accounting Q) Jessica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd, for $15 000. These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for $8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriate consolidation adjustment entries are as follows:  (i) Sales.....Dr  15,000       Cost of Sales...Cr    13,000       Inventory..........Cr     2,000  (ii) Deferred Tax Asset...Dr      300             Income Tax Expense...Cr      300Required(i) Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basis the correct adjustment entry.  (ii) Determine the consolidation worksheet entries in the following year, assuming the inventory has been –sold, and explain the adjustments on a line-by-line basis.

Question 4: Jessica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd, for $15 000. These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for $8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriate consolidation adjustment entries are as follows: Sales Dr 15 000 Cost of Sales Cr 13 000 Inventory Cr 2 000 Deferred Tax Asset Dr 300 Income Tax Expense Cr 300 Required (i) Discuss whether the entries suggested by Li Chen are correct, explaining on a line by line basis the correct adjustment entries. (ii) Determine the consolidation worksheet entries in the following year, assuming the inventory has been-sold, and explain the adjustments on a line by line basis. ->

PROBLEM ABOUT INTERCOMPANY TRANSACTIONS   On January 2, 2004, KRABBY PATTY acquired 90% of the outstanding shares of CORAL BITS Co. at book value. During 2004 and 2005, intercompany sales amounted to $200,000 and 400,000, respectively. CORAL BITS Co. consistently recognized 25% mark-up based on sales while KRABBY PATTY had a 25% gross profit on cost. The inventories of the buying affiliate, which all came from inter-company transactions are as follows:   Year Ended 2004 Year Ended 2005 KRABBY PATTY $24,000 $16,000 CORAL BITS $10,000 $4,000 On October 1, 2004, KRABBY PATTY purchased a piece of land costing $100,000 from CORAL BITS for $150,000. On December 31, 2005, KRABBY PATTY sold this land to an unrelated party for $150,000. On the other hand, on July 1, 2005, KRABBY PATTY sold a used machine with a carrying value of $6,000 and remaining life of 3 years to CORAL BITS CO. for $4,200. Below are the Statement of Comprehensive Income for the two companies in 2005.…

Par Co. Incurred the following costs in order to acquire all of the shares of Sub Co.: • Purchase price (paid in cash) $500,000 • Legal fees $10,000 The business combination agreement states that if the earnings of Sub Co. exceed an average of $2.50 per share over the next two years, Par Co. will make an additional cash payment of $100,000 to the former shareholders of Sub Co. Recent earnings per share for Sub Co. have averaged $1.75. On the date of the business combination, it is not known whether the earnings target will be met. On the date of the combination, the acquisition cost would be calculated as: Multiple Cholce $500,000 $510,000 $610,000 $600,000

4. Jackson company owns 80% of Canton corporation's common stock during October canceled merchandise to Jackson for $250,000 at December 31, 40% of the merchandise remains in Jackson's inventory gross profit percentage is 120% for Jackson and 30% for Canon the amount of intra- entity gross profit in inventory at December 31 That should be eliminated in the consolidation process is a. Zero b. $24,000, c. $75,000 d. $30,000

(TCO A) Steven Inc. sold $219,000 in inventory to Thomas Co. during 20X0 for $300,000. Thomas resold $100,000 of this merchandise in 20X0 with the remainder to be disposed of during 20X1.Assume Steven owns 28% of Thomas and applies the equity method.Required:(1) Determine Steven's share of the unrealized gain at the end of 20X0.(2) Prepare the journal entry Steven should record at the end of 20X0 to defer the unrealized intra-entity inventory profit.