NB Corporation owns 90% of the outstanding voting stock of PEI Inc. At the date of...
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NB Corporation owns 90% of the outstanding voting stock of PEI Inc. At the date of acquisition, PEI's Retained Earnings were $1,800,000. On December 31, Year-3, NB Corp sold a plant to PEI at its fair value of $1,500,000 and recorded a gain of $400,000. The plant had a remaining useful life of five years on the date of the intercompany transaction and was still held within the consolidated entity at the end of Year-5. At the end of Year-5, selected figures from the two companies' financial statements were as follows: Plant $6,700,000 Accumulated Depreciation 2,400,000 Retained Earnings, beginning of 4,500,000 the year Depreciation expense Net Income NB Corporation Dividends declared 700,000 1,350,000 400,000 PEI Inc. $3,600,000 1,200,000 2,800,000 580,000 500,000 150,000 NB uses the cost method to account for its investment in PEI. Both companies pay income tax at the rate of 40%. Required: a) Calculate the amount to be reported on the Year-5 consolidated statements for the accounts listed above. b) Now assume that the year-3 intercompany sale was upstream, that is, PEI sold to NB. Calculate the amounts to be reported on the Year-5 Consolidated financial statements for the accounts listed above. NB Corporation owns 90% of the outstanding voting stock of PEI Inc. At the date of acquisition, PEI's Retained Earnings were $1,800,000. On December 31, Year-3, NB Corp sold a plant to PEI at its fair value of $1,500,000 and recorded a gain of $400,000. The plant had a remaining useful life of five years on the date of the intercompany transaction and was still held within the consolidated entity at the end of Year-5. At the end of Year-5, selected figures from the two companies' financial statements were as follows: Plant $6,700,000 Accumulated Depreciation 2,400,000 Retained Earnings, beginning of 4,500,000 the year Depreciation expense Net Income NB Corporation Dividends declared 700,000 1,350,000 400,000 PEI Inc. $3,600,000 1,200,000 2,800,000 580,000 500,000 150,000 NB uses the cost method to account for its investment in PEI. Both companies pay income tax at the rate of 40%. Required: a) Calculate the amount to be reported on the Year-5 consolidated statements for the accounts listed above. b) Now assume that the year-3 intercompany sale was upstream, that is, PEI sold to NB. Calculate the amounts to be reported on the Year-5 Consolidated financial statements for the accounts listed above. NB Corporation owns 90% of the outstanding voting stock of PEI Inc. At the date of acquisition, PEI's Retained Earnings were $1,800,000. On December 31, Year-3, NB Corp sold a plant to PEI at its fair value of $1,500,000 and recorded a gain of $400,000. The plant had a remaining useful life of five years on the date of the intercompany transaction and was still held within the consolidated entity at the end of Year-5. At the end of Year-5, selected figures from the two companies' financial statements were as follows: Plant $6,700,000 Accumulated Depreciation 2,400,000 Retained Earnings, beginning of 4,500,000 the year Depreciation expense Net Income NB Corporation Dividends declared 700,000 1,350,000 400,000 PEI Inc. $3,600,000 1,200,000 2,800,000 580,000 500,000 150,000 NB uses the cost method to account for its investment in PEI. Both companies pay income tax at the rate of 40%. Required: a) Calculate the amount to be reported on the Year-5 consolidated statements for the accounts listed above. b) Now assume that the year-3 intercompany sale was upstream, that is, PEI sold to NB. Calculate the amounts to be reported on the Year-5 Consolidated financial statements for the accounts listed above. NB Corporation owns 90% of the outstanding voting stock of PEI Inc. At the date of acquisition, PEI's Retained Earnings were $1,800,000. On December 31, Year-3, NB Corp sold a plant to PEI at its fair value of $1,500,000 and recorded a gain of $400,000. The plant had a remaining useful life of five years on the date of the intercompany transaction and was still held within the consolidated entity at the end of Year-5. At the end of Year-5, selected figures from the two companies' financial statements were as follows: Plant $6,700,000 Accumulated Depreciation 2,400,000 Retained Earnings, beginning of 4,500,000 the year Depreciation expense Net Income NB Corporation Dividends declared 700,000 1,350,000 400,000 PEI Inc. $3,600,000 1,200,000 2,800,000 580,000 500,000 150,000 NB uses the cost method to account for its investment in PEI. Both companies pay income tax at the rate of 40%. Required: a) Calculate the amount to be reported on the Year-5 consolidated statements for the accounts listed above. b) Now assume that the year-3 intercompany sale was upstream, that is, PEI sold to NB. Calculate the amounts to be reported on the Year-5 Consolidated financial statements for the accounts listed above.
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Related Book For
Advanced Accounting
ISBN: 978-1259444951
13th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni
Posted Date:
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