Answer ALL of the questions COMPLETELY.Showing All work: Parent Corp acquired a 90% interest in Sub Corp
Question:
Answer ALL of the questions COMPLETELY….Showing All work:
- Parent Corp acquired a 90% interest in Sub Corp on Jan 1, 2011. Sub regularly sells inventory to the parent at a 30% mark-up. Intercompany purchases and sales of INVENTORY for 2011, 2012 & 2013 are as follows:
YEAR INTERCO SALES Interco End Inventory
2011 $400,000 $50,000
2012 $300,000 $45,000
2013 $600,000 $55,000
Selected data for Dec 31, 2013 for Parent and Sub are as follows:
Parent Sub
Income Statement:
Sales ($1,800,000) ($1,200,000)
Cost of Goods Sold 1,250,000 600,000
Operating Expenses 450,000 300,000
Sub Income ($270,000) 0
Balance Sheet:
Inventory $300,000 $160,000
Required:
- Prepare the Elimination entries for 2011, 2012 & 2013 for intercompany Inventory transactions
- Prepare the Consolidated Income Statement for 2013
- What is the NCI net income for 2013?
- What is the value of ending inventory on the Consolidated Balance Sheet at Dec 31, 2013?
- On Jan 1, 2013 the Sub issues $550,000 in 6% 8 year Bonds at 103%, interest payable Dec 31. On June 30, 2017, the Parent acquires the Sub’s bonds for $498,500. The Sub is 65% owned by the parent.
Required:
- Record the elimination entries for Dec 31, 2017 and 2018
- What is the impact on the Sub’s Net Income for 2017?
- What is the impact on the Sub’s Income for 2018?
- On Jan 1, 2013, the Sub acquires land, at a cost of $250,000 and a Building with a cost of $625,000. The building has a $50,000 salvage value and a 15 year estimated useful life. On Jun 30, 2020, the Sub sells the land and the building to the parent for $1,250,000 (30% land & 70% building). The Sub is 75% owned by the Parent.
Required:
- Prepare the Elimination & Adjustment entries for 2020 and 2021.
- What is the impact on the Sub’s internally generated profit for 2020 and 2021?
- What is the impact on the NCI Net Income for 2020 & 2021?
- What is the value reported on the Consolidated Balance Sheet for Land & Building & Accumulated Depreciation for 2020 & 2021?
- On Jan 1, 2014, the Sub issues $400,000 7.5% 8 year bonds at 92% interest payable annually on Dec 31. The Sub is 85% owned by the Parent. On Jan 1, 2017, the Parent purchases the Sub’s Bonds for $412,500.
Required:
- Record the Elimination and Adjustment Entries for Dec 31, 2017 & 2018.
- What is the impact of the Sub’s Internally generated Net Income?
- What is the impact on the NCI net income for 2017 & 2018?
- What is the value reported on the Consolidated Balance Sheet for Bonds Payable & Discount/Premium on Dec 31, 2017?
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik