Fundamentals of Advanced Accounting
6th Edition
ISBN: 9780077862237
Author: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Publisher: McGraw-Hill Education
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Question
Chapter 5, Problem 26P
a.
To determine
Prepare worksheet entries to consolidate these two companies as of December 31, 2015.
a.
Expert Solution
Explanation of Solution
The worksheet entries to consolidate these two companies as of December 31, 2015:
Entry G | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit | Credit |
Retained earnings of Company S | $ 2,000 | |||
Cost of goods sold | $ 2,000 | |||
(being opening unrealized gross profit eliminated) | ||||
Entry TA | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit | Credit |
Equipment | $ 4,000 | |||
Investment in Company S | $ 2,400 | |||
| $ 6,400 | |||
(Being excess depreciation eliminated) | ||||
Entry S | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit | Credit |
Common stock | $ 120,000 | |||
Retained earnings on 01/01/2015 | $ 258,000 | |||
Investment in Company S | $ 302,400 | |||
Non controlling interest | $ 75,600 | |||
(being controlling and non-controlling interest recorded) | ||||
Entry A | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit | Credit |
Contracts | $ 54,000 | |||
Buildings | $ 16,000 | |||
Investment in Company S | $ 56,000 | |||
Non controlling interest | $ 14,000 | |||
(being assets transferred to controlling and non-controlling interest) | ||||
Entry I | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit | Credit |
Investment income | $ 10,000 | |||
Investment in Company S | $ 10,000 | |||
(being intra-entity net income recorded) | ||||
Entry E | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit | Credit |
Depreciation expense | $ 2,000 | |||
Amortization expense | $ 3,000 | |||
Contracts | $ 3,000 | |||
Buildings | $ 2,000 | |||
(being amortization and depreciation recorded) | ||||
Entry TI | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit | Credit |
Sales | $ 20,000 | |||
Cost of goods sold | $ 20,000 | |||
(being intra-entity sale eliminated) | ||||
Entry G | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit | Credit |
Cost of goods sold | $ 4,500 | |||
Inventory | $ 4,500 | |||
(being unrealized gross profit eliminated) | ||||
Entry ED | ||||
Date | Accounts Title and Explanation | Post Ref. | Debit | Credit |
Accumulated Depreciation | $ 600 | |||
Depreciation expense | $ 600 | |||
(being excess depreciation eliminated) |
Table: (1)
b.
To determine
Compute the net income attributable to the non-controlling interest for 2015.
b.
Expert Solution
Explanation of Solution
Computation of net income attributable to the non-controlling interest for 2015:
Particulars | Amount |
Sales | $ 130,000 |
Less: Cost of goods sold | $ (70,000) |
Less: Operating expenses | $ (40,000) |
Excess acquisition date fair value | $ (5,000) |
Net income after adjustment | $ 15,000 |
Add: Unrealized gross profit of 2014 | $ 2,000 |
Less: Unrealized gross profit of 2015 | $ (4,500) |
Income to subsidiary to be consolidated | $ 12,500 |
Percent of ownership of non-controlling interest | 20% |
Net income attributable to non-controlling interest | $ 2,500 |
Table: (2)
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Chapter 5 Solutions
Fundamentals of Advanced Accounting
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - Prob. 3QCh. 5 - Prob. 4QCh. 5 - James, Inc., sells inventory to Matthews Company,...Ch. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - Prob. 11QCh. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - Prob. 1PCh. 5 - Prob. 2PCh. 5 - Prob. 3PCh. 5 - Prob. 4PCh. 5 - Prob. 5PCh. 5 - Use the same information as in problem (5) except...Ch. 5 - Prob. 7PCh. 5 - Prob. 8PCh. 5 - Prob. 9PCh. 5 - Prob. 10PCh. 5 - What is the total of consolidated cost of goods...Ch. 5 - Prob. 12PCh. 5 - Prob. 13PCh. 5 - Prob. 14PCh. 5 - What is the consolidated total for inventory at...Ch. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - Prob. 19PCh. 5 - Prob. 20PCh. 5 - Prob. 21PCh. 5 - Prob. 22PCh. 5 - Prob. 23PCh. 5 - Prob. 24PCh. 5 - Prob. 25PCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 1DYSCh. 5 - Prob. 2DYS
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