Professional Documents
Culture Documents
9 1
9 1
Equipment $ 14,500
Investment in Sledge $ 7,440
Accumulated depreciation $ 21,940
Sales $ 41,000
Cost of goods sold $ 41,000
Ques 2
Revenues $ 340,000
Cost of goods sold $ (175,000)
Other expenses $ (61,000)
Excess acquisition-date fair value amortization $ (8,150)
Net income adjusted for amortization $ 95,850
Gross profit on 2017 upstream inventory transfer recognized in 2018 (Entry *G) $ 1,500
Gross profit on 2018 upstream inventory transfer deferred until 2019 (Entry G) $ (8,200)
Adjusted net income of subsidiary—2018 $ 89,150
Outside ownership 10.00%
Net income attributable to noncontrolling interest $ 8,915
a.
Entry *G
To remove intra entity gross profit beginning account balance 1500
5000*0.3
b.
Entry *TA
To adjust the equipment balance to original cost 37000
and to adjust accumulated depriciation to the consolidated 1860
January 1 2018 balance
7440
Entry S
to eliminate subsidiary's stockholder's equirt accounts and recognise NCI
Entry A
To recognise acquistion date fair value allocations adjusted for 2 years of
amortization(2016 & 2017)
Entry I
Subsidiary reported net income 104000
Recognize upstream intra-entity gross profit in beg. inventory
Intra-entity inventory year-end 2017 (upstream) 5000
Gross profit rate 30%
Intra-entity gross profit in 2018 beginning inventory 1500
Defer upstream intra-entity gross profit in ending inventory
Intra-entity inventory year-end 2018 (upstream) 20500
Gross profit rate 40%
Intra-entity gross profit in 2018 ending inventory -8200
Excess amortization -8150
2018 adjusted subsidiary net income 89150
Parent’s ownership percentage 90%
Parent’s share of subsidiary adjusted net income 80235
Depreciation adjustment from 2017 downstream fixed asset sale 1860
Entry E
DEPRICIAITON:
81000/20 years 4050
41000/10 years 4100
8150
Entry TI
Eliminate intra entity inventory transffers
Entry G
To remove gross prpfit from ending account balance 8200