A parent purchased a 70% controlling interest in its sub several years ago. The aggregate fair...
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A parent purchased a 70% controlling interest in its sub several years ago. The aggregate fair value of the controlling and NCI was $350,000 in excess of the sub's SHE on acquisition date. The excess was assigned to a building that was estimated to be undervalued by $200,000 and to an unrecorded patent valued at $150,000. The building is depreciated over a 16-year period and patent is amortized over an 8-year period. During the current year, the parent and sub reported a total of $600,000 of I/C sales. The BOY there were $40,000 of upstream I/C profits in the parent's inventory. At the end of the current year, there were $60,000 of downstream intercompany profits in the sub's inventory. During the current year, the sub declare and paid $80,000 in dividends. Parent Sub [I-r] Sales $10,000,000 $1,000,000 Cost of goods sold (6,800,000) (600,000) Gross profit 3,200,000 400,000 [l-e] Income from sub 37,125 0 Operating expenses (1,800,000) (270,000) [l-d] Net income $1,437,125 $130,000 Compute the Income from Sub of $37,125 Consolidated Income Statement Sales Cost of goods sold Gross profit Operating expenses Net income Net income attributable to noncontrolling interests Net income attributable to the parent A parent purchased a 70% controlling interest in its sub several years ago. The aggregate fair value of the controlling and NCI was $350,000 in excess of the sub's SHE on acquisition date. The excess was assigned to a building that was estimated to be undervalued by $200,000 and to an unrecorded patent valued at $150,000. The building is depreciated over a 16-year period and patent is amortized over an 8-year period. During the current year, the parent and sub reported a total of $600,000 of I/C sales. The BOY there were $40,000 of upstream I/C profits in the parent's inventory. At the end of the current year, there were $60,000 of downstream intercompany profits in the sub's inventory. During the current year, the sub declare and paid $80,000 in dividends. Parent Sub [I-r] Sales $10,000,000 $1,000,000 Cost of goods sold (6,800,000) (600,000) Gross profit 3,200,000 400,000 [l-e] Income from sub 37,125 0 Operating expenses (1,800,000) (270,000) [l-d] Net income $1,437,125 $130,000 Compute the Income from Sub of $37,125 Consolidated Income Statement Sales Cost of goods sold Gross profit Operating expenses Net income Net income attributable to noncontrolling interests Net income attributable to the parent
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Consolidated Income Statement Amount in Sales 10000000 1000000 600000 10400000 Cost of goods ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
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