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Preparing a consolidated income statement-Cost method with noncontrolling interest, AAP and upstream and downstream intercompany inventory profits A parent company purchased a 70% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $255,000 in excess of the subsidiary's Stockholders' Equity on the acquisition date. This excess was assigned to a building that was estimated to be undervalued by $153,000 and to an unrecorded Trademark valued at $102,000. The building asset is being depreciated over a 10-year period and the Trademark is being amortized over a 6-year period, both on the straight-line basis with no salvage value. During the current year, the parent and subsidiary total of $240.000 At the beginning there wer

Preparing a consolidated income statement-Cost method with noncontrolling interest, AAP and upstream and downstream intercompany inventory profits A parent company purchased a 70% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $255,000 in excess of the subsidiary's Stockholders' Equity on the acquisition date. This excess was assigned to a building that was estimated to be undervalued by $153,000 and to an unrecorded Trademark valued at $102,000. The building asset is being depreciated over a 10-year period and the Trademark is being amortized over a 6-year period, both on the straight-line basis with no salvage value. During the current year, the parent and subsidiary total of $240.000 At the beginning there wer

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Preparing a consolidated income statement-Cost method with noncontrolling interest, AAP and upstream and downstream intercompany inventory profits A parent company purchased a 70% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $255,000 in excess of the subsidiary's Stockholders' Equity on the acquisition date. This excess was assigned to a building that was estimated to be undervalued by $153,000 and to an unrecorded Trademark valued at $102,000. The building asset is being depreciated over a 10-year period and the Trademark is being amortized over a 6-year period, both on the straight-line basis with no salvage value. During the current year, the parent and subsidiary reported a total of $340,000 of intercompany sales. At the beginning of the current year, there were $59,500 of upstream intercompany profits in the parent's inventory. At the end of the current year, there were $42,500 of downstream intercompany profits in the subsidiary's inventory. During the current year, the subsidiary declared and paid $85,000 of dividends. The parent company uses the cost method of pre- consolidation investment bookkeeping. Each company reports the following income statement for the current year: Income statement: Sales Cost of goods sold Gross profit Income (loss) from subsidiary Operating expenses Net income Parent Subsidiary $10,200,000 $1,105,000 (5,950,000) (552,500) 4,250,000 552,500 59,500 (2,125,000) (314,500) $2,184,500 $238,000 a. Starting with the parent's current-year pre-consolidation net income of $2,184,500, compute the amount of current-year net income attributable to the parent that will be reported in the consolidated financial statements. Do not use negative signs with your answers below. Reconciliation of Cost to Equity Method Parent's pre-consolidation net income 2,184,500 Dividend Income 59,500 P% x Net income of subsidiary 166,600 P% x AAP amortization 22,610 P% of Upstream profit 41,650 Downstream profit 42,500 Net income attributable to controlling interest 2,268,140 b. Prepare the consolidated income statement for the current year. Do not use negative signs with your answers below. Consolidated Income Statement Sales 10,965,000 Cost of goods sold Gross profit Operating expenses Net income Net income attributable to noncontrolling interests Net income attributable to the parent 2,268,140 Just need help solving missing numbers for B. I know it involes adding and subtracting what we are given/ waht we found im just not sure which ones.
Transcribed Image Text:Preparing a consolidated income statement-Cost method with noncontrolling interest, AAP and upstream and downstream intercompany inventory profits A parent company purchased a 70% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $255,000 in excess of the subsidiary's Stockholders' Equity on the acquisition date. This excess was assigned to a building that was estimated to be undervalued by $153,000 and to an unrecorded Trademark valued at $102,000. The building asset is being depreciated over a 10-year period and the Trademark is being amortized over a 6-year period, both on the straight-line basis with no salvage value. During the current year, the parent and subsidiary reported a total of $340,000 of intercompany sales. At the beginning of the current year, there were $59,500 of upstream intercompany profits in the parent's inventory. At the end of the current year, there were $42,500 of downstream intercompany profits in the subsidiary's inventory. During the current year, the subsidiary declared and paid $85,000 of dividends. The parent company uses the cost method of pre- consolidation investment bookkeeping. Each company reports the following income statement for the current year: Income statement: Sales Cost of goods sold Gross profit Income (loss) from subsidiary Operating expenses Net income Parent Subsidiary $10,200,000 $1,105,000 (5,950,000) (552,500) 4,250,000 552,500 59,500 (2,125,000) (314,500) $2,184,500 $238,000 a. Starting with the parent's current-year pre-consolidation net income of $2,184,500, compute the amount of current-year net income attributable to the parent that will be reported in the consolidated financial statements. Do not use negative signs with your answers below. Reconciliation of Cost to Equity Method Parent's pre-consolidation net income 2,184,500 Dividend Income 59,500 P% x Net income of subsidiary 166,600 P% x AAP amortization 22,610 P% of Upstream profit 41,650 Downstream profit 42,500 Net income attributable to controlling interest 2,268,140 b. Prepare the consolidated income statement for the current year. Do not use negative signs with your answers below. Consolidated Income Statement Sales 10,965,000 Cost of goods sold Gross profit Operating expenses Net income Net income attributable to noncontrolling interests Net income attributable to the parent 2,268,140 Just need help solving missing numbers for B. I know it involes adding and subtracting what we are given/ waht we found im just not sure which ones.
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