Up and its 80 percent–owned subsidiary (Down) reported the following figures for the year ending December 31, 2018. Down paid dividends of $30,000 during this period. UP DOWN Sales $(600000) $(300000) Cost of goods sold 300000 140000 Operating expenses 174000 60000 Dividend Income (24000) -0- Net income $(150000) $(100000) In 2017, intra-entity gross profits of $30,000 on upstream transfers of $90,000 were deferred into 2018. In 2018, intra-entity gross profits of $40,000 on upstream transfers of $110,000 were deferred into 2019.a. What amounts appear for each line in a consolidated income statement? Explain your computations.b. What income tax expense should appear on the consolidated income statement if each company files a separate return? Assume that the tax rate is 30 percent.

Up and its 80 percent–owned subsidiary (Down) reported the following figures for the year ending December 31, 2018. Down paid dividends of $30,000 during this period. UP DOWN Sales $(600000) $(300000) Cost of goods sold 300000 140000 Operating expenses 174000 60000 Dividend Income (24000) -0- Net income $(150000) $(100000) In 2017, intra-entity gross profits of $30,000 on upstream transfers of $90,000 were deferred into 2018. In 2018, intra-entity gross profits of $40,000 on upstream transfers of $110,000 were deferred into 2019.a. What amounts appear for each line in a consolidated income statement? Explain your computations.b. What income tax expense should appear on the consolidated income statement if each company files a separate return? Assume that the tax rate is 30 percent.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 18P

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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.
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?
In 2022, ABC Company sold inventory costing P150,000 to its 80%-owned subsidiary for P210,000. A portion of this was resold by the subsidiary in 2022 for P200,000. Other information available at the end of 2022 were as follows: Parent Subsidiary Sales P4,750,000 P2,700,000 Cost of sales 3,100,000 1,750,000 Net income 225,000 120,000 Dividends declared 150,000 150,000 Inventory From outsiders 120,000 60,000 From parent 63,000 How much is the consolidated inventory as of December 31, 2022? How much is the consolidated cost of sales for 2022? How much is the consolidated sales for 2022?
In 2022, ABC Company sold inventory costing P150,000 to its 80%-owned subsidiary for P210,000. A portion of this was resold by the subsidiary in 2022 for P200,000. Other information available at the end of 2022 were as follows: Parent Subsidiary Sales P4,750,000 P2,700,000 Cost of sales 3,100,000 1,750,000 Net income 225,000 120,000 Dividends declared 150,000 150,000 Inventory From outsiders 120,000 60,000 From parent 63,000 How much is the consolidated cost of sales for 2022? How much is the consolidated sales for 2022? How much is the net income attributable to the parent for 2022?
Selected information from the separate and consolidated income statements of CHAELISA LTD.and as subsidiary, JENSOO INC. for the year ended December 31, 2021 are as follows: CHAELISA LTD. JENSOOINC. ConsolidatedSales P600,000 P420,000 P924,000COGS 450,000 330,000 693,000Gross profit P150,000 P 90,000 P231,000 During 2021, CHAELISA LTD. sold goods to JENSOO INC. at the same mark-up on cost that CHAELISA LTD. uses for all sales. At December 31, 2021, JENSOO INC. had not paid all of these goods and still held 37.5% of them in inventory. Compute for the original cost of goods in JENSOO INC.’s inventory acquired from Apple.
In 2022, ABC Company sold inventory costing P150,000 to its 80%-owned subsidiary for P210,000. A portion of this was resold by the subsidiary in 2022 for P200,000. Other information available at the end of 2022 were as follows: Parent Subsidiary Sales 4, 750,000 2,700,000 Cost of Sales 3,100,000 1,750,000 Net Income 225,000 120,000 Dividends declared 150,000 150,000 Inventory From Outsiders 120,000 60,000 From Parent 0 63,000 1. How much is the consolidated sales for 2022? 2. How much is the net income attributable to the parent for 2022? 3. How much is the net income attributable to the non-controlling interests for 2022?
Up and its 80 percent–owned subsidiary (Down) reported the following figures for the year ending December 31, 2018. Down paid dividends of $30,000 during this period.In 2017, intra-entity gross profits of $30,000 on upstream transfers of $90,000 were deferred into 2018. In 2018, intra-entity gross profits of $40,000 on upstream transfers of $110,000 were deferred into 2019.a. What amounts appear for each line in a consolidated income statement? Explain your computations.b. What income tax expense should appear on the consolidated income statement if each company files a separate return? Assume that the tax rate is 30 percent.
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Addo Plc owns many subsidiaries and 25% of Vivian Plc. In the year ended 31 December 2018, Addo Plc sold goods to Vivian for GH¢200,000, earning a gross profit margin of 20%. Vivian Plc held GH¢60,000 of them in its inventories at the year end. By what amount should Addo Plc’s cost of sales be increased when preparing its consolidated statement of profit or loss?
Comparative income statements of Sub Corporation for the calendar years 2019, 2020, and 2021 are as follows (in thousands): 2019 2020 2021Sales $22,000 $18,500 $19,250Cost of sales 10,600 9,900 10,100Gross profit 11400 8600 9150Operating expenses 5,700 5,500 6,000Net income $ 5700 $ 3100 $ 3150ADDITIONAL INFORMATION1. Sub was an 80 percent-owned subsidiary of Pub Corporation throughout the 2019–2021 period. Pub’s separate income (excludes income from Sub) was $7,200,000, $6,600,000, and $7,500,000 in 2019, 2020, and 2021, respectively. Pub acquired its interest in Sub at its underlying book value, which was equal to fair value on July 1, 2017.2. Pub sold inventory items to Sub during 2019 at a gross profit to Pub of $720,000. Half the merchandise remained in Sub’s inventory at December 31, 2019. Total sales by Pub to Sub in 2019 were $1,800,000. The remaining merchandise was sold by Sub in 2020.3. Pub’s inventory at December 31, 2020, included items acquired from Sub on…
Comparative income statements of Sub Corporation for the calendar years 2019, 2020, and 2021 are as follows (in thousands): 2019 2020 2021Sales $22,000 $18,500 $19,250Cost of sales 10,600 9,900 10,100Gross profit 11400 8600 9150Operating expenses 5,700 5,500 6,000Net income $ 5700 $ 3100 $ 3150ADDITIONAL INFORMATION1. Sub was an 80 percent-owned subsidiary of Pub Corporation throughout the 2019–2021 period. Pub’s…
Comparative income statements of Sub Corporation for the calendar years 2019, 2020, and 2021 are as follows (in thousands): 2019 2020 2021Sales $22,000 $18,500 $19,250Cost of sales 10,600 9,900 10,100Gross profit 11400 8600 9150Operating expenses 5,700 5,500 6,000Net income $ 5700 $ 3100 $ 3150ADDITIONAL INFORMATION1. Sub was an 80 percent-owned subsidiary of Pub Corporation throughout the 2019–2021 period. Pub’s separate income (excludes income from Sub) was $7,200,000, $6,600,000, and $7,500,000 in 2019, 2020, and 2021, respectively. Pub acquired its interest in Sub at its underlying book value, which was equal to fair value on July 1, 2017.2. Pub sold inventory items to Sub during 2019 at a gross profit to Pub of $720,000. Half the merchandise remained in Sub’s inventory at December 31, 2019. Total sales by Pub to Sub in 2019 were $1,800,000. The remaining merchandise was sold by Sub in 2020.3. Pub’s inventory at December 31, 2020, included items acquired from Sub on which Sub made…