Pearl Company owns 60% of the voting shares of Jasper Inc. which it acquired on the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Pearl Company owns 60% of the voting shares of Jasper Inc. which it acquired on the latter's incorporation on January 1, 2012 and accounts for its investment using the cost method. The Income Statements for the two companies for the year ended December 31, 2012 are as follows: Pearl Company $ 3,200,000 60,000 Jasper Inc. Sales $ 1,200,000 Dividend income 3,260,000 1,200,000 2,400,000 300,000 2,700,000 Cost of sales 900,000 Other expenses 100,000 1,000,000 Income before tax 560,000 200,000 Income taxes 200,000 80,000 Net income for the year $ 360,000 $ 120,000 The only intercompany transaction during 2012 was a sale of inventory from Pearl Company to Jasper Inc. for $400,000. Half of this was still in Jasper's inventory at December 31, 2012. Pearl Company earned a gross pro2t of 25% on the sale. Jasper Inc. paid dividends of $100,000 during 2012. Both companies pay income tax at a rate of 40%. Required: Prepare, in good form, an income statement for Pearl Company and its investee Jasper Inc. in accordance with International Financial Reporting Standards a) b) if Jasper Inc. is reported as a joint venture (using the equity method). if Jasper Inc. is reported as a subsidiary. Pearl Company owns 60% of the voting shares of Jasper Inc. which it acquired on the latter's incorporation on January 1, 2012 and accounts for its investment using the cost method. The Income Statements for the two companies for the year ended December 31, 2012 are as follows: Pearl Company $ 3,200,000 60,000 Jasper Inc. Sales $ 1,200,000 Dividend income 3,260,000 1,200,000 2,400,000 300,000 2,700,000 Cost of sales 900,000 Other expenses 100,000 1,000,000 Income before tax 560,000 200,000 Income taxes 200,000 80,000 Net income for the year $ 360,000 $ 120,000 The only intercompany transaction during 2012 was a sale of inventory from Pearl Company to Jasper Inc. for $400,000. Half of this was still in Jasper's inventory at December 31, 2012. Pearl Company earned a gross pro2t of 25% on the sale. Jasper Inc. paid dividends of $100,000 during 2012. Both companies pay income tax at a rate of 40%. Required: Prepare, in good form, an income statement for Pearl Company and its investee Jasper Inc. in accordance with International Financial Reporting Standards a) b) if Jasper Inc. is reported as a joint venture (using the equity method). if Jasper Inc. is reported as a subsidiary.
Expert Answer:
Answer rating: 100% (QA)
Given Pearl Company owns 60 of voting shares in Jasper Inc on Jan 12012 So Pear company Holding Co J... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay
Posted Date:
Students also viewed these accounting questions
-
Write a one-page essay on "one of the boiler types" presented in the lecture and the chapters indicated in our textbook. Boiler type is usually the fuel source and the shell/tube arrangement, the...
-
The following cash data for the year ended December 31 were adapted from a recent annual report of Alphabet (GOOG), formerly known as Google. The cash balance as of January 1 was $18,347 (in...
-
The following cash data for the year ended December 31 were adapted from a recent annual report of Alphabet (GOOG), formerly known as Google. The cash balance as of January 1 was $12,918 (in...
-
Answer the following question based on the information presented for Cloud 9 in the appendix to this text and the current and earlier chapters. You should also consider your answers to the case study...
-
A project has a life of 10 years and a payback period of 10 years. What must be true of project NPV?
-
Consider the biosensor device shown in the figure in the next column. The biosensor is designed to measure the concentration of solute A in the well-mixed liquid phase. At the base of the device is...
-
Quilts R Us (QRU) is considering investing in a new patterning attachment with the cash flow profile shown in the table below. QRU's MARR is 13.5 percent/year. a. What is this investment's external...
-
Isadores Implements, Inc., manufactures pens and mechanical pencils often used for gifts. Overhead costs are currently allocated using direct labor-hours, but the controller has recommended an...
-
Consider the activity-on-arc network diagram below: 1 2 C E 2 4 5 6 3 D 5 5 F G 7 2 8 2 2 1.1 Calculate the early and late event times for each activity in the project network dia- gram. (8) 1.2...
-
A load of lumber er weighing W = 25 kN is being raised as shown by a mobile crane. Knowing that the tension is 25kN in all portions of cable AEF and that the weight of boom ABC is 3kN, determine (a)...
-
Write a research on a legal case that addresses the legalities of employment screening exams used in the selection process. Requirements: Provide a description of the case. Summarize the important...
-
Name your favorite retailer and identify how your retailer uses the four approaches to retaining its best customers. Choose Costco with these four approaches and explain it. Frequent Shopper...
-
What are some ways that we can better understand cultural differences?
-
What are the demographics of Este Lauder's targets audience? Age, gender, income, education Why they target these demographics and how they target them. Gives examples of how they targeted them?
-
You are asked to create formal letter of complaint to any Amazon from which you have received bad service. Provide letter to Amazon with whose service you have recently been disappointed. Letter...
-
ABC Inc. is a company which sells air tickets. Its line of business is generally considered quite stable and low risk. ABC Inc. is considering expanding into the tourism business. Tourism is...
-
Using systems theory, identify the nature of the time, cost, and quality problems experienced in the Singapore Sports Hub project lifecycle. How are these problems associated with the management...
-
The rate at which the temperature of an object changes is proportional to the difference between its own temperature and the temperature of the surrounding medium. Express this rate as a function of...
-
What are the three types of government organizations and where should each look for guidance in accounting?
-
What is the objective of preparing consolidated financial statements?
-
What is negative goodwill? How should it be reported in the consolidated statements?
-
Briefly describe what is meant by DEI efforts.
-
Explain each of the four examples of a bona fide occupational qualification.
-
What important precedents were set by the Griggs v. Duke Power Company case? The Albemarle v. Moody case?
Study smarter with the SolutionInn App