Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Sonnet Company began operations as a new subsidiary of Poem Company, a U.S.Corporation, on January 2, 2019, by issuing common stock for 180,000 foreigncurrency units (FCU). Sonnet immediately borrowed 35,000 FCU with a 10-year, 10%note, interest payable annually on January 1. On the same date, Sonnet bought abuilding for 200,000 FCU. The building was to be depreciated for 20 years on astraight-line basis with a residual value of 40,000 FCU.During the year, the building was rented for 9,000 FCU per month and all rentwas collected monthly.On May 1 a repair on the building of 15,000 FCU was completed and paid for. Landfor a parking lot was acquired for 30,000 FCU in cash on June1.A dividend of 20,000 FCU was declared and paid on December 1. (The dividendwas paid to Poem which owns 100% of Sonnet.)Exchange rates for the year were as follows:
January 2, 2019 1 FCU = $0.30May 1, 2019 1 FCU = $0.39June 1, 2019 1 FCU = $0.38November 1, 2019 1 FCU = $0.41December 1, 2019 1 FCU = $0.39December…
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 thanku
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:
Prepare the consolidation worksheet entries for Sky Ltd at 30 June 2021 concerning the intragroup inventory transfers.
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