Chapter 06 – Intercompany Inventory Transactions
P6-30 Consolidation Using Financial Statement Data
a.
Equity Method Entries on Bower Corp.’s Books:
Investment in Concerto Co.
21,000
Income from Concerto Co.
21,000
Record Bower Corp.’s 60% share of Concerto Co.’s 20X6 income
Cash
12,000
Investment in Concerto Co.
12,000
Record Bower Corp.’s 60% share of Concerto Co.’s 20X6 dividend
Income from Concerto Co.
6,000
Investment in Concerto Co.
6,000
Record amortization of excess acquisition price
Investment in Concerto Co.
4,000
Income from Concerto Co.
4,000
Reverse of the deferred gross profit from downstream sales in 20X5
Income from Concerto Co.
2,000
Investment in Concerto Co.
2,000
Eliminate the deferred gross profit from downstream sales in 20X6
Investment in Concerto Co.
4,800
Income from Concerto Co.
4,800
Reverse of the deferred gross profit from upstream sales in 20X5
Income from Concerto Co.
5,400
Investment in Concerto Co.
5,400
Eliminate the deferred gross profit from upstream sales in 20X6
Book Value Calculations:
NCI
40%
+
Bower
Corp.
60%
=
Common
Stock
+
Retained
Earnings
Beginning Book
Value
80,000
120,000
50,000
150,000
+ Net Income
14,000
21,000
35,000
– Dividends
(8,000)
(12,000)
(20,000)
Ending Book Value
86,000
129,000
50,000
165,000
