Question

Vonda Inc. (Vonda) is a 100-percent owned subsidiary of Atik Ltd. (Atik). During the year ended March 31, 2017, Vonda sold to Atik, on credit, merchandise costing $500,000 for $1,000,000. These were the only transactions that Atik and Vonda entered into during fiscal 2017 (with each other or with third parties) and no other costs were incurred.

Required:
a. Prepare an income statement for Vonda for the year ended March 31, 2017.
b. What amount of accounts receivable would Vonda report on its March 31, 2017 balance sheet?
c. What amount of inventory and accounts payable would Atik report on its March 31, 2017 balance sheet?
d. Prepare Atik's March 31, 2017 consolidated income statement assuming that intercompany transactions aren't eliminated. How much would be reported for accounts receivable, inventory, and accounts payable on the March 31, 2017 consolidated balance sheet?
e. Prepare Atik's March 31, 2017 consolidated income statement, assuming that intercompany transactions are eliminated. How much would be reported for accounts receivable, inventory, and accounts payable on the March 31, 2017 consolidated balance sheet?
f. Discuss the differences in the information you prepared in parts (d) and (e). Which information is more useful to stakeholders? Explain.



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  • CreatedFebruary 26, 2015
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