Question: Company S is a 70 owned subsidiary of Company P Company
Company S is a 70%-owned subsidiary of Company P. Company S is building a ship to be used by Company P. The ship was 40% completed in 2011 and 100% completed in 2012. The actual and budgeted profit on the ship was $100,000. Company S uses the percentage-of-completion method for its long-term construction projects. The ship went into service for Company P on January 1, 2013, and is depreciated straight-line over 20 years. How much profit was recorded by Company S in 2011, 2012, and 2013? How much profit will appear in the consolidated statements for the ship in 2011, 2012, and 2013?
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