P owns 40% of S. Professional judgement has applied, and it is concluded that P controls S. The 2019 partial pre-tax income statements of both companies are shown below. Assume no other expenses than indicated below. Revenues S $150,000 $85,000 Miscellaneous Expenses Depreciation Expense $40,000 $30,000 $20,000 $25,000 On January 1, 2019, S sold equipment to P at a profit of $7.000 (before tax). The equipment had a remaining useful life of twenty-five years on that date. During 2019 S declared a dividend of $2.000. Further during 2019, there was a goodwill impairment of $1.000. Required: Assuming a tax rate of 40%. Create a consolidated income statement, including the share attributable to the non-controlling interest.

P owns 40% of S. Professional judgement has applied, and it is concluded that P controls S. The 2019 partial pre-tax income statements of both companies are shown below. Assume no other expenses than indicated below. Revenues S $150,000 $85,000 Miscellaneous Expenses Depreciation Expense $40,000 $30,000 $20,000 $25,000 On January 1, 2019, S sold equipment to P at a profit of $7.000 (before tax). The equipment had a remaining useful life of twenty-five years on that date. During 2019 S declared a dividend of $2.000. Further during 2019, there was a goodwill impairment of $1.000. Required: Assuming a tax rate of 40%. Create a consolidated income statement, including the share attributable to the non-controlling interest.

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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Berny Ltd owns 100 per cent of Cozy Ltd. On 1 July 2019 Berny Ltd sells an item of plant to Cozy Ltd for $3.6 million. This plant cost Berny $4.5 million and had accumulated depreciation of $1.8 million at the date of the sale. The remaining useful life of the plant is assessed as 12 years and the tax rate is 30 per cent. Required: a) Prepare the entries to eliminate the effects of the above intragroup transactions in the consolidation journal of Berny Ltd’s group at 30 June 2020 b) Prepare the entries to eliminate the effects of the above intragroup transactions in the consolidation journal of Berny Ltd’s group at 30 June 2021
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