Santa Corporation is 80 percent owned subsidiary of Panta Corporation, acquired by Panta on January 1, 20X1 for $320,000 when Santa’s common stock and retained earnings were $100,000 and $160,000 respectively. All book values of Santa’s assets and liabilities were equal to their fair values except inventory which was undervalued by $60,000 and unrecorded patent which its fair value is equal the remaining of differential value with remaining life of 10 years. Both firms are using FIFO method of inventory. Followings are the transactions of merchandize between these two firms:

Required:

1. Calculate total fair value of Santa as of 1/1/20X1.
2. Calculate total value of the patent.
3. Calculate investment income recorded by Panta for 20X1.
4. Calculate balance of investment in Santa in the book of Panta as of Dec.r 31, 20X1
5. Verify the amount 20X2 of Income from Santa for $34,600 .
6. Unrealized profit in Santa’s beginning inventory is : $_________________.
7. Unrealized profit in Santa’s ending inventory is: $_________________.
8. Patent (net) that appear in the Dec. 31, 20X2 consolidated balance sheet (show all of your calculations) :

$_________________.

9. Verify the balance of investment in Santa that appear in the 20X2 Panta’s balance sheet:

$_________________.

10. How much investment in Santa is reported in the 20X2 consolidated balance sheet?

$_______________.

11. Minority Interest Income (Expense) for 20x2 (show all of your calculations)is : $________________.

12. Consolidated (controlling group) net income for 20X2 is: $_______________.

13, Show, in detail, working paper eliminating entries for all inter-company merchandize inventory transactions in order to prepare 20x2 consolidated financial statements.

14. Prepare Consolidated Income Statement for year 20X2 .

Transcribed Image Text:

Cost t Sales value Ending Inventory 20X1 Panta sold to Santa S80,000 $100,000 525,000 16,000 20X2 Panta sold to Santa 60,000 80,000 Panta Santa Separate income (net included Investment income) for 20X1 S100,000 Dividend $40,000 15,000 8,000 Income statements for Panta and Santa Corporations for 20x2 are: Panta Santa Sales S300,000 SI50,000 Income from Santa 34,600 Cest of Sales (200,000) ( 90,000) Ocher expenses ( 67.000) (10.00o Net lacome Dividend Balance Sheet item (December 31, 20x2): Investment in Santa $368,800 Cost t Sales value Ending Inventory 20X1 Panta sold to Santa S80,000 $100,000 525,000 16,000 20X2 Panta sold to Santa 60,000 80,000 Panta Santa Separate income (net included Investment income) for 20X1 S100,000 Dividend $40,000 15,000 8,000 Income statements for Panta and Santa Corporations for 20x2 are: Panta Santa Sales S300,000 SI50,000 Income from Santa 34,600 Cest of Sales (200,000) ( 90,000) Ocher expenses ( 67.000) (10.00o Net lacome Dividend Balance Sheet item (December 31, 20x2): Investment in Santa $368,800

Answer rating: 100% (QA)

1 400000 2 80000 3 20600 4 334200 5 Santa net income 50000 Amortization expense 8000 Net income 42000 Multiply by percentage of ownership 80 Total 336... View the full answer