Soft Bound Version for Advanced Accounting 13th Edition
13th Edition
ISBN: 9781260110579
Author: Hoyle
Publisher: McGraw Hill Education
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Textbook Question
Chapter 6, Problem 36P
Alford Company and its 80 percent–owned subsidiary, Knight, have the following income statements for 2018:
| Alford | Knight | |
| Revenues | $(500,000) | $(230,000) |
| Cost of goods sold | 300,000 | 140,000 |
| 40,000 | 10,000 | |
| Other expenses | 20,000 | 20,000 |
| Gain on sale of equipment | (30,000) | –0– |
| Equity in earnings of Knight | (36,200) | –0– |
| Net income | $(206,200) | $ (60,000) |
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.
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Alford Company and its 80 percent–owned subsidiary, Knight, have the following income statements for 2021:
Alford
Knight
Revenues
$
(500,000
)
$
(230,000
)
Cost of goods sold
300,000
140,000
Depreciation and amortization
40,000
10,000
Other expenses
20,000
20,000
Gain on sale of equipment
(30,000
)
0
Equity in earnings of Knight
(36,200
)
0
Net income
$
(206,200
)
$
(60,000
)
Additional Information for 2021
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…
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.
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.
Chapter 6 Solutions
Soft Bound Version for Advanced Accounting 13th Edition
Ch. 6 - Prob. 1QCh. 6 - Prob. 2QCh. 6 - When is a firm required to consolidate the...Ch. 6 - Prob. 4QCh. 6 - Prob. 5QCh. 6 - Prob. 6QCh. 6 - Prob. 7QCh. 6 - Prob. 8QCh. 6 - Prob. 9QCh. 6 - Prob. 10Q
Ch. 6 - Prob. 11QCh. 6 - How do noncontrolling interest balances affect the...Ch. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Prob. 15QCh. 6 - Prob. 16QCh. 6 - Prob. 17QCh. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Problems 7 and 8 are based on the following...Ch. 6 - Prob. 8PCh. 6 - Bens man Corporation is computing EPS. One of its...Ch. 6 - Prob. 10PCh. 6 - Prob. 11PCh. 6 - Prob. 12PCh. 6 - Prob. 13PCh. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - On January 1, Coldwater Company has a net book...Ch. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 20PCh. 6 - On January 1, 2018, Stamford issues 10,000...Ch. 6 - On January 1, 2018, Stamford reacquires 8,000 of...Ch. 6 - Prob. 23PCh. 6 - Prob. 24PCh. 6 - On December 31, 2017. PanTech Company invests...Ch. 6 - Prob. 26PCh. 6 - Prob. 27PCh. 6 - Prob. 28PCh. 6 - Prob. 29PCh. 6 - Prob. 30PCh. 6 - Prob. 31PCh. 6 - Prob. 32PCh. 6 - Prob. 33PCh. 6 - Prob. 34PCh. 6 - Prob. 35PCh. 6 - Alford Company and its 80 percentowned subsidiary,...Ch. 6 - Prob. 37PCh. 6 - Prob. 38PCh. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42PCh. 6 - Prob. 43PCh. 6 - Prob. 44PCh. 6 - Fred, Inc., and Herman Corporation formed a...Ch. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 49PCh. 6 - Prob. 50PCh. 6 - Prob. 1DYSCh. 6 - Prob. 2DYSCh. 6 - The FASB ASC Subtopic Variable Interest Entities...
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