Advanced Accounting: Problem Sets

1231 Words Apr 24th, 2013 5 Pages
Exercise 6-1 Part A (1) Sales 2,700,000 Purchases (Cost of Goods Sold) 2,700,000 To eliminate intercompany sales of 2011 (2) 12/31 Inventory-Income Statement (Cost of Goods Sold) 487,500 12/31 Inventory (Balance Sheet) 487,500 To eliminate unrealized intercompany profit in inventory

Exercise 6-2 Reported Net Income- S Company $ 525,000 Noncontrolling Interest Percentage 0.20 Noncontrolling Interest in Net Income $ 105,000

Exercise 6-3 2011 Reported net income $ 30,000 Unrealized intercompany profit included therein = $5,200; $5,200 0.25 = (1,300) Profit included in
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sales to Searl Company (ending | | | | Inventory) | 21,000 | Pearce Company 's percentage of Searl Company 's income | | | | realized from third parties, .80($675,000) | 540,000 | | | | | | | Controlling interest in Consolidated Income | $2,337,000 |

Exercise 6-5 2011 Pearce Company 's income from its independent operations $1,500,000 Plus: Pearce Company 's interest in the realized net income of Searl Company: Reported Net income $600,000 Less Amortization of difference between implied and book value ($75,000 + $112,500) (187,500) Less unrealized profit included therein ($90,000 - ) (18,000) Income realized in transaction with third parties $394,500 Pearce Company 's interest therein (0.8 $394,500) $315,600 Controlling interest in consolidated net income $1,815,600 2012 Pearce Company 's income from its independent operations $1,800,000 Plus: Pearce Company 's interest in the realized net income of Searl Company: Reported Net income $750,000 Less amortization of difference between implied and book value (75,000) Less profit included therein that has not been realized in transactions with third parties ($105,000 - ) (21,000) Plus profit realized in 2012 ($90,000 -) 18,000 Income realized in transaction with third parties $672,000 Pearce Company 's interest therein (0.8 $672,000) 537,600 Controlling

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