Peat Company owns a 90% interest in Seaton Company. The consolidated income statement drafted by the controller of Peat Company appeared as follows: Sales Cost of Sales Peat Company and Subsidiary Consolidated Income Statement for Year Ended December 31, 2020 Operating Expense Consolidated Income Less Noncontrolling Interest in Consolidated Income Controlling Interest in Consolidated Net Income $9,200,000 1,800,000 $14,000,000 11,000,000 3,000,000 200,000 $ 2,800,000 During your audit you discover that intercompany sales transactions were not reflected in the controller's of the consolidated income statement. Information relating to intercompany sales and unrealized intercon profit is as follows: 2019 Sales-Seaton to Peat $1,500,000 $1,800,000 2020 Sales-Peat to Seaton 900,000 1,400,000 Cost Selling Price Unsold at Year-End 1/3 2/5 Required: Prepare a corrected consolidated income statement for Peat Company and Seaton Company for the year en December 31, 2020.

Peat Company owns a 90% interest in Seaton Company. The consolidated income statement drafted by the controller of Peat Company appeared as follows: Sales Cost of Sales Peat Company and Subsidiary Consolidated Income Statement for Year Ended December 31, 2020 Operating Expense Consolidated Income Less Noncontrolling Interest in Consolidated Income Controlling Interest in Consolidated Net Income $9,200,000 1,800,000 $14,000,000 11,000,000 3,000,000 200,000 $ 2,800,000 During your audit you discover that intercompany sales transactions were not reflected in the controller's of the consolidated income statement. Information relating to intercompany sales and unrealized intercon profit is as follows: 2019 Sales-Seaton to Peat $1,500,000 $1,800,000 2020 Sales-Peat to Seaton 900,000 1,400,000 Cost Selling Price Unsold at Year-End 1/3 2/5 Required: Prepare a corrected consolidated income statement for Peat Company and Seaton Company for the year en December 31, 2020.

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

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Peat Company owns a 90% interest in Seaton Company. The consolidated income statement drafted by the
controller of Peat Company appeared as follows:
Peat Company and Subsidiary
Consolidated Income Statement
for Year Ended December 31, 2020
Sales
Cost of Sales
Operating Expense
Consolidated Income
$9,200,000
1,800,000
Less Noncontrolling Interest in Consolidated Income
Controlling Interest in Consolidated Net Income
11,000,000
3,000,000
200,000
$2,800,000
During your audit you discover that intercompany sales transactions were not reflected in the controller's draft
of the consolidated income statement. Information relating to intercompany sales and unrealized intercompany
profit is as follows:
$14,000,000
Cost Selling Price Unsold at Year-End
1/3
2/5
2019 Sales-Seaton to Peat $1,500,000 $1,800,000
2020 Sales-Peat to Seaton 900,000 1,400,000
Required:
Prepare a corrected consolidated income statement for Peat Company and Seaton Company for the year ended
December 31, 2020.

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