S Company is an 80 percent owned subsidiary of P Corp. Excess at the time of acquisition only pertains to goodwill. The separate statements of comprehensive income of the two companies for 2011 are as follows:

	P	S
Sales	350,000	150,000
Cost of Goods Sold	(200,000)	(105,000)
Gross Profit	150,000	45,000
Operating Expenses	(60,000)	(15,000)
Other Income	10,000	5,000
Operating Income	100,000	35,000
Dividend Income	20,000	-
Comprehensive Income	120,000	35,000

The following data apply in 2011:

S Company sold 90,000 of goods to P Corp. The gross profits on sales to P and to unrelated companies are equal and have not changed from the previous years.

P Corp. held 30,000 of the goods purchased from S in its beginning inventory and 20,000 of such goods in ending inventory.

On August 31, 2011. Park sold a machinery costing 150,000 to S for 126,000. At this date, the machinery had accumulated depreciation of 45,000. Both companies depreciate their machinery for 10 years with no salvage value.

Questions:

1. The machinery in the intercompany transfer should have a net book value in the 2011 consolidated statements amounting to:

2. The net adjustments to the accumulated depreciation on machineries in the 2011 consolidated working paper amounts to:

3. The amount to be reported as consolidated net income for 2011 will be:

Answer rating: 100% (QA)

The machinery book value of leu 2 126000 z 4200 2 121800 ch intercompany tr... View the full answer