H has a 75% owned subsidiary S. During the year ending 31 December 2021 H sold inventory to S for an invoice price of £800,000. S have since sold 75% of that inventory to third parties. The sale was at a mark-up of 25%on cost to H. S is the only subsidiary of H. What is the adjustment to inventory that would be included in the consolidated statement of financial position of H at the year-ending 31 December 2021 resulting from this sale? Show you calculations.
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H has a 75% owned subsidiary S. During the year ending 31 December 2021 H sold inventory to
S for an invoice price of £800,000. S have since sold 75% of that inventory to third parties. The
sale was at a mark-up of 25%on cost to H. S is the only subsidiary of H.
What is the adjustment to inventory that would be included in the consolidated
financial position
calculations.
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- H has a 75% owned subsidiary S. During the year ending 31 December 2021 H sold inventory to S for an invoice price of £800,000. S have since sold 75% of that inventory to third parties. The sale was at a mark-up of 25%on cost to H. S is the only subsidiary of H. What is the adjustment to inventory that would be included in the consolidated statement of financial position of H at the year-ending 31 December 2021 resulting from this sale? Show you calculations.Kent Ltd owns all of the shares of Lodh Ltd. In relation to the following intragrouptransactions, all parts of which are independent unless specified, prepare theconsolidation worksheet adjusting entries for preparation of the consolidated financialstatements as at 30 June 2020. Assume an income tax rate of 30%. a. On 1 January 2020, Kent Ltd sold inventory costing $10,000 to Lodh Ltd at a transfer (sale) price $16,000. Lodh Ltd sold half of this inventory to an external party for $10,000 (i.e., half of the inventory is remained with Lodh Ltd at the end of the year). b. During March 2018, Lodh Ltd paid a $5,500 interim dividend. c. Kent Ltd rented a spare warehouse to Lodh Ltd. The total charge for the rental was $6,000. Lodh Ltd paid the whole amount to Kent Ltd during the year. d. On 1 July 2019, Kent…Pader Inc. acquired 75% of Mader Inc. ordinary shares. During 2020, Pader Inc. produced 200,000 balls at a cost of P79 each and sol 140,000 balls to Mader Inc. for P90 each. Mader Inc. sold 72,000 balls to unrelated parties for P117 each prior to December 31, 2020 and sold the remaining in early 2021 for P130 each. Both entities use perpetual inventory system. What amount of cost of goods sold should be reported in the consolidated income statement in 2020?* a. P 11,060,000 b. P 11,852,000 c. P 5,688,000 d. P 6,480,000
- Alford Company and its 80 percent–owned subsidiary, Knight, have the following income statements for 2018:Additional Information for 2018• Intra-entity inventory transfers during the year amounted to $90,000. All intra-entity transfers were downstream from Alford to Knight.• Intra-entity gross profits in inventory at January 1 were $6,000, but at December 31 they are $9,000.• Annual excess amortization expense resulting from the acquisition is $11,000.• Knight paid dividends totaling $20,000.• The noncontrolling interest’s share of the subsidiary’s income is $9,800.• During the year, consolidated inventory rose by $11,000 while accounts receivable and accounts payable declined by $8,000 and $6,000, respectively.Using either the direct or indirect method, compute net cash flows from operating activities during the period for the business combination.PP Corp. owned 80% of KK Corp.'s common stock. During October 20x9, KK sold merchandise to PP for P140,000. At December 31, 20x9, 50% of this merchandise remained in Prince's inventory. For 20x9, gross profit percentages were 30% of sales for PP and 40% of sales for KK. The amount of unrealized intercompany profit in ending inventory at December 31, 20x9 that should be eliminated in the consolidation process isFlathead Ltd owns all of the shares of Mullet Ltd. During the year ended 30 June 2022, Flathead Ltd sold inventory to Mullet Ltd for $30,000. The inventory had previously cost Flathead Ltd $24,000 and by 30 June 2022, Mullet Ltd had sold 75% of the inventory to external parties outside the group. All of this inventory was sold to external parties by 30 June 2022. The tax rate is 30%. The required consolidation entries for the year ended 30 June 2022 are: Sales revenue Dr $30,000 Cost of sales Cr $28,500 Inventory Cr $1,500 Deferred tax asset Dr $450 Income tax expense Cr $450 Retained earnings Dr $1,400 Income tax
- Lorn Corporation purchased inventory from Dresser Corporation for P 120,000 on September 20, 20x2, and resold 80% of the purchased inventory to unaffiliated companies prior to December 31, 20x2, for P140,000. Dresser produced the inventory sold to Lorn for P75,000. Lorn owns 70% of Dresser’s voting common stock. The companies had no other transactions during 20x2. What inventory balance will be provided by the consolidated entity on December 31, 20x2? A. P15, 000 B. P16, 800 C. P24, 000 D. P39, 000Lorn Corporation purchased inventory from Dresser Corporation for P120,000 on September 20, 20x2, and resold 80% of the purchased inventory to unaffiliated companies prior to December 31, 20x2, for P140,000. Dresser produced the inventory sold to Lorn for P75,000. Lorn owns 70% of Dresser’s voting common stock. The companies had no other transactions during 20x2. What inventory balance will be provided by the consolidated entity on December 31, 20x2? A. P15,000 C. P24, 000B. P16, 800 D. P39, 000KK Corporation owns 80 percent of LL Corporation’s common stock. During October, LL sold merchandise to KK for P100.000. At December 31, 50 percent of this merchandise remains in KK’s inventory. Gross profit percentages were 30 percent for KK and 40 percent for LL. The amount of unrealized intercompany profit in ending inventory at December 31 that should eliminated in the consolidation process is
- Sky Ltd acquired all the issued shares of Jupiter Ltd on 1 January 2019. The following transactions occurred between the two entities: • On 1 June 2020, Sky Ltd sold inventory to Jupiter Ltd for $12 000; By 30 June 2020, Jupiter Ltd had sold 20% of this inventory to other entities for $3000. The other 80% was all sold to external entities by 30 June 2021 for $13 000. • During the 2020–21 period, Jupiter Ltd sold inventory to Sky Ltd for $6000 at cost plus 20% markup. Of this inventory, 20% remained on hand in Sky Ltd at 30 June 2021. The tax rate is 30%. Required: a) Prepare the consolidation worksheet entries for Sky Ltd at 30 June 2021 concerning the intragroup inventory transfers. b) Compute the cost of goods sold to be reported in the consolidated income statement for 2021 relating to this intra-group sale. Please avoid solutions in an image based thankuAlpha, Inc. owns 80 percent of outstanding stock of Tulip Corporation. Intra-entity sales of $320,000 occurred during 2020 and again in 2021. This merchandise cost $240,000 each year. Of the total transfers, $70,000 was still held on December 31, 2020, with $50,000 unsold on December 31, 2021. The sales is from Alpha to Tulip. In preparing for year 2021 consolidation entries, to account for intra-entity gross profit deferred from year 2020, it should enter consolidation entry *G by: a. Debit Investment in Tulip at $17,500 b. Debit Retained Earnings at $17,500 c. Debit Inventory at $17,500. d. Credit Inventory at $12,500.During 20x9, PP Corporation recorded sales of inventory costing P500,0000 to SS Company, its wholly owned subsidiary, on the same terms as sales made to third parties. At December 31,20x9, SS held one-fifth of this goods inventory. The following information pertains to PP and SS’s sales for 20x9: (see image below) In its 20x9 consolidated income statement, what amount should PP report as cost of sales?