Chapter 06 – Intercompany Inventory Transactions
E6-13 Consolidated Balance Sheet Worksheet
a.
Equity Method Entries on Doorst Corp.’s Books:
Investment in Hingle Co.
49,000
Income from Hingle Co.
49,000
Record Doorst Corp.’s 70% share of Hingle Co.’s 20X8 income
Cash
9,800
Investment in Hingle Co.
9,800
Record Doorst Corp.’s 70% share of Hingle Co.’s 20X8 dividend
Income from Hingle Co.
10,000
Investment in Hingle Co.
10,000
Eliminate the deferred gross profit from downstream sales in 20X8
Income from Hingle Co.
28,000
Investment in Hingle Co.
28,000
Eliminate the deferred gross profit from upstream sales in 20X8
Book Value Calculations:
NCI
30%
+
Doorst
Corp.
70%
=
Common
Stock
+
Retained
Earnings
Beginning Book Value
103,200
240,800
150,000
194,000
+ Net Income
21,000
49,000
70,000
– Dividends
(4,200)
(9,800)
(14,000)
Ending Book Value
120,000
280,000
150,000
250,000
Adjustment to Basic Consolidation Entry
NCI
Doorst Corp
Net Income
21,000
49,000
– Gross profit deferral (down)
(10,000)
– Gross profit deferral (up)
(12,000)
(28,000)
Income to be eliminated
9,000
11,000
———————————————————-—————————
Ending Book Value
120,000
280,000
– Gross profit deferral (down)
(10,000)
– Gross profit deferral (up)
(12,000)
(28,000)
Adjusted Book Value
108,000
242,000
108,000
242,000
Copyright © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized
for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted
P6-17 Consolidated Income Statement Data
a.
$180,000 = $550,000 + $450,000 – $820,000
b.
January 1, 20X2: $25,000 = $75,000 – $50,000
December 31, 20X2: $15,000 = $180,000 + $210,000 – $375,000
c.
Investment in Bitner
15,000
NCI in NA of Bitner
10,000
Cost of Goods Sold
25,000
Eliminate beginning inventory profit.
Sales
180,000
Cost of Goods Sold
165,000
Inventory
15,000
Eliminate intercompany sale of inventory.
The basic entry (not shown) would be adjusted by 15,000 of deferred profit
and by 25,000 to reverse the gross profit deferral from the prior year to
complete the elimination process.
d.
Reported net income of Bitner Company
$ 90,000
Prior-period profit realized in 20X2
25,000
Unrealized profit on 20X2 sales
(15,000)
Realized income
$100,000
Proportion held by noncontrolling interest
x 0.40
Income assigned to noncontrolling interest
$ 40,000
