Cassowary Corporation acquired a 70% interest in Fruit Corporation in 1999 at a time when Fruit's book values and fair values were equal. In 2003, Fruit sold land to Cassowary for $82,000 that cost $72,000. The land remained in Cassowary's possession until 2005 when Cassowary sold it outside the combined entity for $102,000. After the books were closed in 2005, it was discovered that Cassowary had not considered the unrealized gain from its intercompany purchase of land in preparing the consolidated financial statements. The only entry on Cassowary's books was a debit to Land and a credit to Cash in 2003 for $82,000, and, in 2005, a debit to Cash for $102,000 and credits to Land for $82,000 and Gain on sale of land for $20,000. of the error, Before the discovery statements disclosed the following amounts: the consolidated financial 2003 2004 2005 Consolidated net income $ 750,000 600,000 910,000 Land 200,000 240,000 300,000 Required: 1. Determine the correct amounts of consolidated net income for 2003, 2004, and 2005.

Cassowary Corporation acquired a 70% interest in Fruit Corporation in 1999 at a time when Fruit's book values and fair values were equal. In 2003, Fruit sold land to Cassowary for $82,000 that cost $72,000. The land remained in Cassowary's possession until 2005 when Cassowary sold it outside the combined entity for $102,000. After the books were closed in 2005, it was discovered that Cassowary had not considered the unrealized gain from its intercompany purchase of land in preparing the consolidated financial statements. The only entry on Cassowary's books was a debit to Land and a credit to Cash in 2003 for $82,000, and, in 2005, a debit to Cash for $102,000 and credits to Land for $82,000 and Gain on sale of land for $20,000. of the error, Before the discovery statements disclosed the following amounts: the consolidated financial 2003 2004 2005 Consolidated net income $ 750,000 600,000 910,000 Land 200,000 240,000 300,000 Required: 1. Determine the correct amounts of consolidated net income for 2003, 2004, and 2005.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Explain LIFO method and list three advantages of LIFO method?
Define the term lnvesting activities? Explain with an example?
Define benchmarking
Write out the equation for the SML and explain its meaning.
Define strategy.
Explain the concept of contribution and its importance to the CVP technique.
Explain the Relationship to the PW Analysis?
Explain Evaluat ing a Single Project?