ABC Company acquired 80 percent ownership of XYZ Company's voting shares on January 1, 2020, at...

 

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ABC Company acquired 80 percent ownership of XYZ Company's voting shares on January 1, 2020, at underlying book value. The fair value of the non-controlling interest on that date was equal to 20 percent of the book value of XYZ Company. During 2020, ABC purchased inventory for $30,000 and sold the full amount to XYZ Company for $50,000. On December 31, 2020, XYZ ending inventory included $10,000 of items purchased from ABC. Also in 2020, XYZ purchased inventory for $80,000 and sold the units to ABC for $100,000. ABC included $30,000 of its purchase from XYZ in ending inventory on December 31, 2020. Summary income statement data for the two companies revealed the following: Sales Income from subsidiary Cost of goods sold Other expenses Total expenses Net income ABC company $300,000 39,000 339,000 190,000 45,000 (235,000) 104,000 XYZ company 172,000 172,000 110,000 29,000 (139,000) 33,000 Required: SHOW CALCULATIONS a. Compute the amount to be reported as sales in the 2020 consolidated income statement. b. Compute the amount to be reported as cost of goods sold in the 2020 consolidated income statement. c. What amount of income will be assigned to the non-controlling shareholders in the 2020 consolidated income statement? d. What amount of income will be assigned to the controlling interest in the 2020 consolidated income statement? ABC Company acquired 80 percent ownership of XYZ Company's voting shares on January 1, 2020, at underlying book value. The fair value of the non-controlling interest on that date was equal to 20 percent of the book value of XYZ Company. During 2020, ABC purchased inventory for $30,000 and sold the full amount to XYZ Company for $50,000. On December 31, 2020, XYZ ending inventory included $10,000 of items purchased from ABC. Also in 2020, XYZ purchased inventory for $80,000 and sold the units to ABC for $100,000. ABC included $30,000 of its purchase from XYZ in ending inventory on December 31, 2020. Summary income statement data for the two companies revealed the following: Sales Income from subsidiary Cost of goods sold Other expenses Total expenses Net income ABC company $300,000 39,000 339,000 190,000 45,000 (235,000) 104,000 XYZ company 172,000 172,000 110,000 29,000 (139,000) 33,000 Required: SHOW CALCULATIONS a. Compute the amount to be reported as sales in the 2020 consolidated income statement. b. Compute the amount to be reported as cost of goods sold in the 2020 consolidated income statement. c. What amount of income will be assigned to the non-controlling shareholders in the 2020 consolidated income statement? d. What amount of income will be assigned to the controlling interest in the 2020 consolidated income statement?

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