Rainy Afternoon Co. owns 80% interest in Sunny Morning Co.During 2011, Rainy sold inventories costing P200,000 to Sunny forP300,000. One-fourth of the inventories were unsold as OfDecember 31, 2011 and were included in Sunny's year-endstatement of financial position at the purchase price from RainyThe individual financial statements of Rainy and Sunny onDecember 31, 2011 show the following information:Rainy1,260,000Sunny380,000Inventory6,700,000(3,015,000)3,685,0002,700,000(1,755,000)945,000SalesCost of salesGross profitThere are no fair value adjustments arising from the businesscombination date.14) How much is the consolidated inventory on December 31, 2011?a. 1,615,000b. 1,590,000C. 1,665,000d. 1,585,00015) How much is the consolidated sales? ea. 9,400,000b. 9,100,000C. 9,375,000d. 9,700,00016) How much is the consolidated cost of sales?a. 4,695,000b. 4,495,000C. 4,565,000d. 4,545,000

The question is based on the concept of Consolidated Financial Statements.

Bainy Afternoon Co. owns 80% interest in Sunny MoPRIhg Co. During 2011, Rainy sold inventories costing P200,000 to Sunny for P300,000. One-fourth of the inventories were December 31, 2011 and were included in Sunny's year-eng statement of financial position at the purchase price from Rainy The individual financial statements of Rainy and Sunny or December 31, 2011 show the following information: unsold as of Sunny Rainy 1,260,000 6.700,000 Inventory 380,000 2,700,000

Bainy Afternoon Co. owns 80% interest in Sunny MoPRIhg Co. During 2011, Rainy sold inventories costing P200,000 to Sunny for P300,000. One-fourth of the inventories were December 31, 2011 and were included in Sunny's year-eng statement of financial position at the purchase price from Rainy The individual financial statements of Rainy and Sunny or December 31, 2011 show the following information: unsold as of Sunny Rainy 1,260,000 6.700,000 Inventory 380,000 2,700,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Rainy Afternoon Co. owns 80% interest in Sunny Morning Co.
During 2011, Rainy sold inventories costing P200,000 to Sunny for
P300,000. One-fourth of the inventories were unsold as Of
December 31, 2011 and were included in Sunny's year-end
statement of financial position at the purchase price from Rainy
The individual financial statements of Rainy and Sunny on
December 31, 2011 show the following information:
Rainy
1,260,000
Sunny
380,000
Inventory
6,700,000
(3,015,000)
3,685,000
2,700,000
(1,755,000)
945,000
Sales
Cost of sales
Gross profit
There are no fair value adjustments arising from the business
combination date.
14) How much is the consolidated inventory on December 31, 2011?
a. 1,615,000
b. 1,590,000
C. 1,665,000
d. 1,585,000
15) How much is the consolidated sales? e
a. 9,400,000
b. 9,100,000
C. 9,375,000
d. 9,700,000
16) How much is the consolidated cost of sales?
a. 4,695,000
b. 4,495,000
C. 4,565,000
d. 4,545,000

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