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104. How is the gain on an intra-entity transfer of a depreciable asset realized?
105. Dithers Inc. acquired all of the common stock of Bumstead Corp. on
January 1, 2011. During 2011, Bumstead sold land to Dithers at a gain.
No
consolidation entry for the sale of the land
was made at the end of 2011. What
errors will this omission cause in the consolidated financial statements?
106. Why do intra-entity transfers between the component companies of a
business combination occur so frequently?
107. Fraker, Inc. owns 90 percent of Richards, Inc. and bought $200,000 of
Richards' inventory in 2011. The transfer price was equal to 30 percent of the
sales price. When preparing consolidated financial statements, what amount of
these sales is eliminated?
108. What is meant by
unrealized inventory gains
, and how are they treated on a
consolidation worksheet?
109. What is the impact on the non-controlling interest of a subsidiary when
there are downstream transfers of inventory between the parent and subsidiary
companies?
110. When is the gain on an intra-entity transfer of land realized?
111. What is the purpose of the
adjustments to depreciation expense
within the
consolidation process when there has been an intra-entity transfer of a
depreciable asset?
112. Tara Company owns 80 percent of the common stock of Stodd Inc. In the
current year, Tara reports sales of $5,000,000 and cost of goods sold of
$3,500,000. For the same period, Stodd has sales of $500,000 and cost of goods
sold of $400,000. During the year, Stodd sold merchandise to Tara for $40,000 at
a price based on the normal markup. At the end of the year, Tara still possesses
20 percent of this inventory. Prepare the consolidation entry to defer the
unrealized gain.
113. King Corp. owns 85% of James Co. King uses the equity method to account
for this investment. During 2011, King sells inventory to James for $500,000. The
inventory originally cost King $420,000. At 12/31/11, 25% of the goods were still
in James' inventory.
Required:
Prepare the
Consolidation Entry TI
and
Consolidation Entry G
for the
consolidation worksheet.
114. Flintstone Inc. acquired all of Rubble Co. on January 1, 2011. Flintstone
decided to use the
initial value method
to account for this investment. During
2011, Flintstone sold to Rubble for $600,000 inventory with a cost of $500,000. At
the end of the year 30% of the goods were still in Rubble's inventory.
Required:
Prepare
Consolidation Entry TI
for the intra-entity transfer and
Consolidation
Entry G
for the ending inventory adjustment necessary for the consolidation
worksheet at 12/31/11.
115. Yoderly Co., a wholly owned subsidiary of Nelson Corp., sold goods to
Nelson near the end of 2011. The goods had cost Yoderly $105,000 and the
selling price was $140,000. Nelson had not sold any of the goods by the end of
the year.
Required:
Prepare
Consolidation Entry TI
and
Consolidation Entry G
that are required for
2011.
116. Strayten Corp. is a wholly owned subsidiary of Quint Inc. Quint decided to
use the
initial value method
to account for this investment. During 2011, Strayten
sold Quint goods which had cost $48,000. The selling price was $64,000. Quint
still had one-eighth of the goods purchased from Strayten on hand at the end of
2011.
Required:
Prepare
Consolidation Entry *G
, which would have to be recorded at the end of
2011.
117. Hambly Corp. owned 80% of the voting common stock of Stroban Co.
During 2011, Stroban sold a parcel of land to Hambly. The land had a book value
of $82,000 and was sold to Hambly for $145,000. Stroban's reported net income
for 2011 was $119,000.
Required:
What was the
non-controlling interest's share of Stroban Co.'s net income
?
