Edgar Co. acquired 60% of Stendall Co. on January 1, 2018. During 2018, Edgar made several sales
Question:
Edgar Co. acquired 60% of Stendall Co. on January 1, 2018. During 2018, Edgar made several sales of inventory to Stendall. The cost and sales price of the goods were $140,000 and $200,000, respectively. Stendall still owned one-fourth of the goods at the end of 2018. Consolidated cost of goods sold for 2018 was $2,140,000 due to a consolidating adjustment for intra-entity transfers less intra-entity gross profit in Stendhal’s ending inventory.
1) How would net income attributable to the non-controlling interest be different if the transfers had been for the same amount and cost, but from Stendall to Edgar?
A) Net income attributable to the non-controlling interest would have decreased by $18,000.
B) Net income attributable to the non-controlling interest would have decreased by $56,000).
C) Net income attributable to the non-controlling interest would have decreased by $6,000
D) Net income attributable to the non-controlling interest would have increased by $20,000.
E) Net income attributable to the non-controlling interest would have increased by $24,000.
2) How would consolidated cost of goods sold have differed if the inventory transfers had been for the same amount and cost, but from Stendall to Edgar?
A) The effect on consolidated cost of goods sold cannot be predicted from the information provided.
B) Consolidated Cost of goods sold would have remained $2,140,000.
C) Consolidated cost of goods sold would have been more than $2, 140,000 because of the controlling interest in the subsidiary.
D) Consolidated cost of goods sold would have been less than $2, 140,000 because of the non-controlling interest the subsidiary.
E) Consolidated cost of goods sold would have been more than $2, 140,000 because Of the non-controlling interest in the subsidiary.
Advanced Accounting
ISBN: 978-1259444951
13th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni