Parent purchased 70% of Sub on January 1, 2018. Cost method is used to record the...
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Parent purchased 70% of Sub on January 1, 2018. Cost method is used to record the investment. At acquisition, patents were identified with a fair value of $880, useful life of 8 years, that were not recorded on Sub's books. Sub declared total dividends of $200 during 2020. 2019: Sales from Sub to Parent were $350, with $60 remaining in Parent inventory at year end. 2020: Sales from Sub to Parent were $200, with $100 remaining in Parent inventory at year end. Gross profit on intercompany sales is 32%. Assume taxes are 40%. Required: Show and label calculations. Using the entity financial statement information below: a) Calculate consolidated inventory for Parent at Dec 31, 2020 b) Prepare the consolidated income statement for Parent for 2020. Show individual adjustments to each line item where indicated with full calculations below. Calculations must be shown. Consolidated a) Inventory Dec 31, 2 b) Income statement Parent Sub Sales and other incom 3,000.0 800.0 Cost of goods sold Other expenses Income tax expense Net income Parent Sub 275.0 Calculations: 1,000.0 300.0 400.0 1,300.0 Income attributable to Parent Income attributable to NCI 62.0 450.0 200.0 40.0 110.0 Adjustments Consolidated Parent purchased 70% of Sub on January 1, 2018. Cost method is used to record the investment. At acquisition, patents were identified with a fair value of $880, useful life of 8 years, that were not recorded on Sub's books. Sub declared total dividends of $200 during 2020. 2019: Sales from Sub to Parent were $350, with $60 remaining in Parent inventory at year end. 2020: Sales from Sub to Parent were $200, with $100 remaining in Parent inventory at year end. Gross profit on intercompany sales is 32%. Assume taxes are 40%. Required: Show and label calculations. Using the entity financial statement information below: a) Calculate consolidated inventory for Parent at Dec 31, 2020 b) Prepare the consolidated income statement for Parent for 2020. Show individual adjustments to each line item where indicated with full calculations below. Calculations must be shown. Consolidated a) Inventory Dec 31, 2 b) Income statement Parent Sub Sales and other incom 3,000.0 800.0 Cost of goods sold Other expenses Income tax expense Net income Parent Sub 275.0 Calculations: 1,000.0 300.0 400.0 1,300.0 Income attributable to Parent Income attributable to NCI 62.0 450.0 200.0 40.0 110.0 Adjustments Consolidated
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To calculate the consolidated inventory for Parent at December 31 2020 we need to first determine the inventory balance for Parent and Sub separately ... View the full answer
Related Book For
Fundamentals of Advanced Accounting
ISBN: 978-0077862237
6th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Posted Date:
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