Baba Plc has owned 100% of the issued share capital of Onua Plc for many years. Baba Plc sells goods to Onua Plc at cost plus 20%. The following information is available for the year ended 31 December 2018. Revenue GH¢ Baba Plc 230,000 Onua Plc 60,000

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 28E

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GG Co. had the following transactions with two subsidiaries, OO and RR during 2020: Sales of P105,000 to OO, Inc., with P31,500 gross profit, OO had P26,250 of this inventory on hand at year end. Purchases of raw materials totaling P420,000 from RR Corp., a wholly owned subsidiary. RR’s gross profit on the sale was P84,000. GG had P98,000 of this inventory remaining on December 31, 2020. Before eliminating entries, GG had combined current assets of P525,000. What amount should GG report in its December 31, 2020 consolidated financial position for current assets?
On January 1, 2018, Alamar Corporation acquired a 42 percent interest in Burks, Inc., for $185,000. On that date, Burks's balance sheet disclosed net assets with both a fair and book value of $337,000. During 2018, Burks reported net income of $84,000 and declared and paid cash dividends of $24,000. Alamar sold inventory costing $29,000 to Burks during 2018 for $41,000. Burks used all of this merchandise in its operations during 2018. Prepare all of Alamar's 2018 journal entries to apply the equity method to this investment....... For this example what/how do you determine the Dividend Recievable amount?
On January 1, 2018, Spark Corp. acquired a 40% interest in Cranston Inc. for $250,000. On that date, Cranston’s balance sheet disclosed net assets of $430,000. During 2018, Cranston reported net income of $100,000 and paid cash dividends of $30,000. Spark sold inventory costing $40,000 to Cranston during 2018 for $50,000. Cranston used all of this merchandise in its operations during 2018. Any excess cost over fair value is attributable to an unamortized trademark with a 20-year remaining life. Prepare all of spark's journal entries for 2018 to apply the equity method to this investment. This is what I have so Far: To record initial investment: Dr Equity Investment 250,000 Cr Cash 250,000 To record investee income: Dr Equity Investment 40, 000 Cr Equty Income To record Dividends Dr Cash 12, 000 Cr Equity Investment 12,000 How do I show the inventory when it is sold?
During the year ended 31 March 2020, Newcastle Plc (Newcastle) sold goodsoriginally costing £35.8 million to its subsidiary London Ltd (London) for a sales price of £40.2 million. On 31 March 2020, 70% of these goods remained in the inventories of London. By 31 March 2020, London had paid £21.8 million of the invoices due for this inventory. Newcastle owns 80% of the ordinary share capital of London. What is the group’s share in the unrealized profit?
Goddy Company owns 80% of the common stock of Morris, Inc. In the current year, Goddy reports sales of $10,000,000 and cost of goods sold of $7,500,000. For the same period, Morris has sales of $200,000 and cost of goods sold of $160,000. During the year, Goddy sold merchandise to Morris for $60,000 at a price based on the normal markup. At the end of the year, Morris still possesses 30 percent of this inventory. Compute consolidated cost of goods so ld. Select one: a. $7,604,500. b. $7,500,000. c. $7,660,000. d. $7,615,000. e. $7,600,000.
Pam Corporation acquired its 90 percent interest in Sun Corporation at its book value of $3,600,000on January 1, 2016, when Sun had capital stock of $3,000,000 and retained earnings of $1,000,000.The December 31, 2016 and 2017, inventories of Pam included merchandise acquired from Sunof $300,000 and $400,000, respectively. Sun realizes a gross profit of 40 percent on all merchandisesold. During 2016 and 2017, sales by Sun to Pam were $600,000 and $800,000, respectively.Summary adjusted trial balances for Pam and Sun at December 31, 2017, follow (inthousands): Pam SunCash $ 1,000 $ 200Receivables—net 2,000 500Inventories 2,400 1,000Plant assets—net 2,500 4,800Investment in Sun—90% 4,356 —Cost of sales 8,000 3,900Other expenses 3,400 1,600Dividends 1,000 500$24,656 $ 12,500Pam SunAccounts payable $ 1,500 $ 900Other liabilities 600 600Capital stock, $10 par 5,000 3,000Retained earnings 3,692 1,500Sales 13,000 6,500Income from Sun 864 —$24,656 $12,500
Shaun Company reports a net income of P280,000 each year and pays an annual cash dividend of P100,000. The company holds net assets of P2,400,000 on January 1, 20x1. Ón that date, Jared Company purchases 40% of the outstanding stock for P1,200,000, which gives it the ability to have joint control with Glassman Company over Shaun. At the purchase date, the excess of Jared's cost over its proportionate share of Shaun's book value was assigned to goodwill. REQUIRED: 5. How much is the net investment income each year? 6. On December 31, 20x2, what is the investment in Shaun Company balance (equity method) in Jared's financial records? Shaun Company reports a net income of P280,000 each year and pays an annual cash dividend of P100,000. The company holds net assets of P2,400,000 on January 1, 20x1. Ón that date, Jared Company purchases 40% of the outstanding stock for P1,200,000, which gives it the ability to have joint control with Glassman Company over Shaun. At the purchase date, the…
TT Company holds 90 percent of BB Company’s common stock. In the current year, TT reports sales of P800,000 and cost of goods sold of P600,000. For this same period, BB has sales of P300,000 and cost of goods sold of P180,000. During the current year, TT sold merchandise to BB for P100,000. The subsidiary still possesses 40 percent of this inventory at the current year-end. TT had established the transfer price based on its normal markup. What are the cost of goods sold?
On January 1, 2020, Mickey Mouse Co. acquired 30,000 ordinary shares out of the 100,000 outstanding ordinary shares of Minnie Mouse Inc. for P5,000,000. Minnie Mouse’s assets and liabilities approximate their fair except for inventory which carrying amount was undervalued by P500,000; machinery is undervalued by P300,000. The remaining useful life of the machinery is 5-years. Minnie Mouse’s net assets has a book value of P10,000,000.On December 31, 2020, Minnie Mouse reported net income of P2,000,000 and declared and paid dividends of P800,000. On December 31, 2021, Minnie Mouse reported net income of P4,500,000 and declared and paid dividends of P1,600,000.How much is the carrying amount of Investment in Associate in 2020? 5,342,000 5,378,000 4,658,000 5,200,000
On January 1, 2020, Mickey Mouse Co. acquired 30,000 ordinary shares out of the 100,000 outstanding ordinary shares of Minnie Mouse Inc. for P5,000,000. Minnie Mouse’s assets and liabilities approximate their fair except for inventory which carrying amount was undervalued by P500,000; machinery is undervalued by P300,000. The remaining useful life of the machinery is 5-years. Minnie Mouse’s net assets has a book value of P10,000,000.On December 31, 2020, Minnie Mouse reported net income of P2,000,000 and declared and paid dividends of P800,000. On December 31, 2021, Minnie Mouse reported net income of P4,500,000 and declared and paid dividends of P1,600,000.How much is the carrying amount of Investment in Associate in 2020? 5,342,000 5,378,000 4,658,000 5,200,000 How much is the Share in Profit account of Mickey Mouse for the year ended December 2020? 582,000 618,000 258,000 222,000
On January 1, 2020, Mickey Mouse Co. acquired 30,000 ordinary shares out of the 100,000 outstanding ordinary shares of Minnie Mouse Inc. for P5,000,000. Minnie Mouse’s assets and liabilities approximate their fair except for inventory which carrying amount was undervalued by P500,000; machinery is undervalued by P300,000. The remaining useful life of the machinery is 5-years. Minnie Mouse’s net assets has a book value of P10,000,000.On December 31, 2020, Minnie Mouse reported net income of P2,000,000 and declared and paid dividends of P800,000. On December 31, 2021, Minnie Mouse reported net income of P4,500,000 and declared and paid dividends of P1,600,000.How much is the carrying amount of Investment in Associate in 2021? What amount of dividend revenue should be reported for the current year?