1. On November 8, 2011, Power Corp. sold land to Wood Co., its wholly owned
subsidiary. The land cost $61,500 and was sold to Wood for $89,000. From the
perspective of the combination, when is the gain on the sale of the land realized?
2. Edgar Co. acquired 60% of Stendall Co. on January 1, 2011. During 2011,
Edgar made several sales of inventory to Stendall. The cost and selling price of
the goods were $140,000 and $200,000, respectively. Stendall still owned one-
fourth of the goods at the end of 2011. Consolidated cost of goods sold for 2011
was $2,140,000 because of a consolidating adjustment for intra-entity sales less
the entire profit remaining in Stendall’s ending inventory.
How would
consolidated cost of goods sold
have differed if the inventory
transfers had been for the same amount and cost, but from Stendall to Edgar?
3. Edgar Co. acquired 60% of Stendall Co. on January 1, 2011. During 2011,
Edgar made several sales of inventory to Stendall. The cost and selling price of
the goods were $140,000 and $200,000, respectively. Stendall still owned one–
fourth of the goods at the end of 2011. Consolidated cost of goods sold for 2011
was $2,140,000 because of a consolidating adjustment for intra-entity sales less
the entire profit remaining in Stendall’s ending inventory.
How would non-controlling interest in net income have differed if the transfers
had been for the same amount and cost, but from Stendall to Edgar?
4. On January 1, 2011, Race Corp. acquired 80% of the voting common stock
of Gallow Inc. During the year, Race sold to Gallow for $450,000 goods which cost
$330,000. Gallow still owned 15% of the goods at year-end. Gallow’s reported net
income was $204,000, and Race’s net income was $806,000. Race decided to use
the
equity method
to account for this investment. What was the
non-controlling
interest’s share of consolidated net income
?
5. Webb Co. acquired 100% of Rand Inc. on January 5, 2011. During 2011,
Webb sold goods to Rand for $2,400,000 that cost Webb $1,800,000. Rand still
owned 40% of the goods at the end of the year. Cost of goods sold was
$10,800,000 for Webb and $6,400,000 for Rand. What was
consolidated cost of
goods sold
?
6. Gentry Inc. acquired 100% of Gaspard Farms on January 5, 2010. During
2010, Gentry sold Gaspard Farms for $625,000 goods which had cost $425,000.
Gaspard Farms still owned 12% of the goods at the end of the year. In 2011,
Gentry sold goods with a cost of $800,000 to Gaspard Farms for $1,000,000, and
Gaspard Farms still owned 10% of the goods at year-end. For 2011, cost of goods
sold was $5,400,000 for Gentry and $1,200,000 for Gaspard Farms. What was
consolidated cost of goods sold
for 2011?
7. X-Beams Inc. owned 70% of the voting common stock of Kent Corp. During
2011, Kent made several sales of inventory to X-Beams. The total selling price
was $180,000 and the cost was $100,000. At the end of the year, 20% of the
goods were still in X-Beams’ inventory. Kent’s reported net income was $300,000.
What was the
non-controlling interest in Kent’s net income
?
8. Justings Co. owned 80% of Evana Corp. During 2011, Justings sold to Evana
land with a book value of $48,000. The selling price was $70,000. In its accounting
records, Justings should
9. Norek Corp. owned 70% of the voting common stock of Thelma Co. On
January 2, 2010, Thelma sold a parcel of land to Norek. The land had a book value
of $32,000 and was sold to Norek for $45,000. Thelma’s reported net income for
2010 was $119,000. What is the
non-controlling interest’s share of Thelma’s net
income
?
10. Clemente Co. owned all of the voting common stock of Snider Co. On
January 2, 2010, Clemente sold equipment to Snider for $125,000. The equipment
had cost Clemente $140,000. At the time of the sale, the balance in accumulated
depreciation was $40,000. The equipment had a remaining useful life of five years
and a $0 salvage value. Straight-line depreciation is used by both Clemente and
Snider.
At what amount should the equipment (net of depreciation) be included in the
consolidated balance sheet dated December 31, 2010?
11. Clemente Co. owned all of the voting common stock of Snider Co. On
January 2, 2010, Clemente sold equipment to Snider for $125,000. The equipment
had cost Clemente $140,000. At the time of the sale, the balance in accumulated
depreciation was $40,000. The equipment had a remaining useful life of five years
and a $0 salvage value. Straight-line depreciation is used by both Clemente and
Snider.
At what amount should the equipment (net of depreciation) be included in the
consolidated balance sheet dated December 31, 2011?
12. During 2010, Von Co. sold inventory to its wholly-owned subsidiary, Lord
Co. The inventory cost $30,000 and was sold to Lord for $44,000. From the
perspective of the combination, when is the $14,000 gain realized?
13. Bauerly Co. owned 70% of the voting common stock of Devin Co. During
2010, Devin made frequent sales of inventory to Bauerly. There were unrealized
gains of $40,000 in the beginning inventory and $25,000 of unrealized gains at the
end of the year. Devin reported net income of $137,000 for 2010. Bauerly decided
to use the equity method to account for the investment. What is the
non-
controlling interest’s share of Devin’s net income
for 2010?
14. Chain Co. owned all of the voting common stock of Shannon Corp. The
corporations’ balance sheets dated December 31, 2010, include the following
balances for
land
: for Chain—$416,000, and for Shannon—$256,000. On the
original date of acquisition, the book value of Shannon’s land was equal to its fair
value. On April 4, 2011, Chain sold to Shannon a parcel of land with a book value
of $65,000. The selling price was $83,000. There were no other transactions
which affected the companies’ land accounts during 2010. What is the
consolidated balance for land
on the 2011 balance sheet?
15. Gibson Corp. owned a 90% interest in Sparis Co. Sparis frequently made
sales of inventory to Gibson. The sales, which include a markup over cost of 25%,
were $420,000 in 2010 and $500,000 in 2011. At the end of each year, Gibson still
owned 30% of the goods. Net income for Sparis was $912,000 during 2011. What
was the
non-controlling interest’s share of Sparis’ net income
for 2011?
16. On January 1, 2011, Payton Co. sold equipment to its subsidiary, Starker
Corp., for $115,000. The equipment had cost $125,000, and the balance in
accumulated depreciation was $45,000. The equipment had an estimated
remaining useful life of eight years and $0 salvage value. Both companies use
straight-line depreciation. On their separate 2011 income statements, Payton and
Starker reported depreciation expense of $84,000 and $60,000, respectively. The
amount of depreciation expense on the consolidated income statement for 2011
would have been
17. Yukon Co. acquired 75% percent of the voting common stock of Ontario
Corp. on January 1, 2011. During the year, Yukon made sales of inventory to
Ontario. The inventory cost Yukon $260,000 and was sold to Ontario for $390,000.
Ontario still had $60,000 of the goods in its inventory at the end of the year. The
amount of unrealized intra-entity profit that should be eliminated in the
consolidation process at the end of 2011 is
18. Prince Corp. owned 80% of Kile Corp.’s common stock. During October
2011, Kile sold merchandise to Prince for $140,000. At December 31, 2011, 50% of
this merchandise remained in Prince’s inventory. For 2011, gross profit
percentages were 30% of sales for Prince and 40% of sales for Kile. The amount
of unrealized intra-entity profit in ending inventory at December 31, 2011 that
should be eliminated in the consolidation process is
19. Pot Co. holds 90% of the common stock of Skillet Co. During 2011, Pot
reported sales of $1,120,000 and cost of goods sold of $840,000. For this same
period, Skillet had sales of $420,000 and cost of goods sold of $252,000.
Included in the amounts for Pot’s sales were Pot’s sales of merchandise to Skillet
for $140,000. There were no sales from Skillet to Pot. Intra-entity sales had the
same markup as sales to outsiders. Skillet still had 40% of the intra-entity sales
as inventory at the end of 2011. What are
consolidated sales and cost of goods
sold
for 2011?
20. Pot Co. holds 90% of the common stock of Skillet Co. During 2011, Pot
reported sales of $1,120,000 and cost of goods sold of $840,000. For this same
period, Skillet had sales of $420,000 and cost of goods sold of $252,000.
Included in the amounts for Skillet’s sales were Skillet’s sales of merchandise to
Pot for $140,000. There were no sales from Pot to Skillet. Intra-entity sales had
the same markup as sales to outsiders. Pot still had 40% of the intra-entity sales
as inventory at the end of 2011. What are
consolidated sales and cost of goods
sold
for 2011?
21. Pot Co. holds 90% of the common stock of Skillet Co. During 2011, Pot
reported sales of $1,120,000 and cost of goods sold of $840,000. For this same
period, Skillet had sales of $420,000 and cost of goods sold of $252,000.
Include in the amounts for Pot’s sales were Pot’s sales of merchandise to Skillet
for $140,000. There were no sales from Skillet to Pot. Intra-entity sales had the
same markup as sales to outsiders. Skillet had resold all of the intra-entity
purchase from Pot to outside parties during 2011. What are
consolidated sales
and cost of goods sold
for 2011?
22. Dalton Corp. owned 70% of the outstanding common stock of Shrugs Inc.
On January 1, 2009, Dalton acquired a building with a ten-year life for $420,000.
No salvage value was anticipated and the building was to be depreciated on the
straight-line basis. On January 1, 2011, Dalton sold this building to Shrugs for
$392,000. At that time, the building had a remaining life of eight years but still no
expected salvage value. In preparing financial statements for 2011, how does this
transfer affect the calculation of Dalton’s share of consolidated net income?