Beruflich Dokumente
Kultur Dokumente
Chapter 5
- Webb Co. acquired 100% of Rand Inc. on January 5, 2013. During 2013, Webb sold goods to Rand for $2,400,000 that cost
Webb $1,800,000. Rand still owned 40% of the goods at the end of the year. Cost of goods sold was $10,800,000 for Webb and
$6,400,000 for Rand. What was consolidated cost of goods sold?
2,400,000-1,800,000=60,000*.40=240,000
10,800,000+6,400,000-2,400,000+240,000=15,040,000
- Gentry Inc. acquired 100% of Gaspard Farms on January 5, 2012. During 2012, Gentry sold Gaspard Farms for $625,000 goods
which had cost $425,000. Gaspard Farms still owned 12% of the goods at the end of the year. In 2013, Gentry sold goods with a
cost of $800,000 to Gaspard Farms for $1,000,000, and Gaspard Farms still owned 10% of the goods at year-end. For 2013, cost
of goods sold was $5,400,000 for Gentry and $1,200,000 for Gaspard Farms. What was consolidated cost of goods sold for
2013?
1,000,000-800,000=200,000*.10=20,000
5,400,000+1,200,000-1,000,000+(24,000)+20,000=5,596,000
(625,000-425,000)*.12
- Clemente Co. owned all of the voting common stock of Snider Co. On January 2, 2012, Clemente sold equipment to Snider for
$125,000. The equipment had cost Clemente $140,000. At the time of the sale, the balance in accumulated depreciation was
$40,000. The equipment had a remaining useful life of five years and a $0 salvage value. Straight-line depreciation is used by
both Clemente and Snider. At what amount should the equipment (net of depreciation) be included in the consolidated balance
sheet dated December 31, 2013?
125,000-140,000=15,000-ignored
100,000-(100,000/5)=60,000
- Bauerly Co. owned 70% of the voting common stock of Devin Co. During 2012, Devin made frequent sales of inventory to
Bauerly. There were unrealized gains of $40,000 in the beginning inventory and $25,000 of unrealized gains at the end of the
year. Devin reported net income of $137,000 for 2012. Bauerly decided to use the equity method to account for the investment.
What is the non-controlling interest's share of Devin's net income for 2012?
137,000+40,000-25,000=152,000*.30=45,600
- Chain Co. owned all of the voting common stock of Shannon Corp. The corporations' balance sheets dated December 31, 2012,
include the following balances for land: for Chain--$416,000, and for Shannon-$256,000. On the original date of acquisition, the
book value of Shannon's land was equal to its fair value. On April 4, 2013, Chain sold to Shannon a parcel of land with a book
value of $65,000. The selling price was $83,000. There were no other transactions which affected the companies' land accounts
during 2012. What is the consolidated balance for land on the 2013 balance sheet?
416,000+256,000=672,000
- Yukon Co. acquired 75% percent of the voting common stock of Ontario Corp. on January 1, 2013. During the year, Yukon
made sales of inventory to Ontario. The inventory cost Yukon $260,000 and was sold to Ontario for $390,000. Ontario still had
$60,000 of the goods in its inventory at the end of the year. The amount of unrealized intra-entity profit that should be eliminated
in the consolidation process at the end of 2013 is
340,000-260,000=130,000 *(60,000/390,000)=20,000
- Prince Corp. owned 80% of Kile Corp.'s common stock. During October 2013, Kile sold merchandise to Prince for $140,000.
At December 31, 2013, 50% of this merchandise remained in Prince's inventory. For 2013, gross profit percentages were 30% of
sales for Prince and 40% of sales for Kile. The amount of unrealized intra-entity profit in ending inventory at December 31, 2013
that should be eliminated in the consolidation process is
140,000*.40=56,000 *.50=28,000
-Pot Co. What are consolidated sales and cost of goods sold for 2013?
1,120,000+420,000=1,540,000-140,000=1,400,000
840,000+252,000-140,000+14,000=966,000
140,000*.40=56,000*.25=14,000.25=280,000/1,120,000
-Pot Co. Had resold all of the intra-entity purchases
First stays the same. Second: 840,000+252,000-140,000=952,000
-Pride Inc. What is the total consolidated Revenues?- Parents Rev+Subs Rev- Intra Equity Sale price sold for
Operating Expenses? Parent +Sub+(Undervalued by amount/years)
Cost of Goods sold? Par+Sub-sold for+(of this payment amount*.60 percent still in possession)=184,800
-Strickland In the consolidation worksheet for 2012, which of the following choices would be a debit entry to eliminate the intraentity transfer of inventory? Sales
-Strickland In the consolidation worksheet for 2012, which of the following choices would be a credit entry to eliminate the intraentity transfer of inventory? Cost of Goods Sold
-Strickland In the consolidation worksheet for 2012, which of the following choices would be a credit entry to eliminate
unrealized intra-entity gross profit with regard to the 2012 intra-entity sales? Inventory
-Which of the following statements is true regarding an intra-entity sale of land?
A loss and a gain are always eliminated in a consolidated income statement
- Parent sold land to its subsidiary for a gain in 2010. The subsidiary sold the land externally for a gain in )A gain will be reported
in the consolidated income statement in 2013
- An intra-entity sale took place whereby the transfer price exceeded the book value of a depreciable asset. Which statement is
true for the year following the sale? A worksheet entry is made with a debit to investment in subsidiary for a downstream transfer
when the parent uses the equity method.
- An intra-entity sale took place whereby the book value exceeded the transfer price of a depreciable asset. Which statement is
true for the year following the sale? A worksheet entry is made with a credit to retained earnings for an upstream transfer
- Compute the equity in earnings of Gargiulo reported on Posito's books for 2012.
(70,000*.90)-(1,200 .25 .90)=62,730
- Compute the equity in earnings of Gargiulo reported on Posito's books for 2013.
(85,000*.90)-(4,000 .25 .90)+270(this is the year befores)=75,870
- Compute the equity in earnings of Gargiulo reported on Posito's books for 2014.
(94,000 *.90)- (3,000 .25 .90)+900=84,825
-For consolidation purposes, what amount would be debited to cost of goods sold for the 2013 consolidation worksheet with regard to the
unrealized gross profit of the 2013 intra-entity transfer of merchandise. (4,000 .25)=1,000
- Patti Company owns 80% of the common stock of Shannon, Inc. In the current year, Patti reports sales of $10,000,000 and cost of goods sold of
$7,500,000. For the same period, Shannon has sales of $200,000 and cost of goods sold of $160,000. During the year, Patti sold merchandise to
Shannon for $60,000 at a price based on the normal markup. At the end of the year, Shannon still possesses 30 percent of this inventory.
-Compute consolidated cost of goods sold
7,500,000+160,000-60,000+15,000 .30)=7,604,500
- Assume the same information, except Shannon sold inventory to Patti. Compute consolidated sales.
10,000,000+200,000=10,200,00-60,000=10,140,000
-Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2012, for $75,000. The land originally cost
Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2012 and 2013, respectively. Leo uses the equity method to account for its
investment.
Compute the gain or loss on the intra-entity sale of land
75,000-60,000=15,000 gain