Parent Company acquired 80% of the ordinary shares of Subsidiary Company at a time when Subsidiary’s book values and fair values were equal. Selected financial data are available for 2022 (see image below).Intercompany sales are as follows (see image below).How much is the Consolidated Net Income?please explain. Selected financial data are available for 2022:ParentInventory, 01/01/2022Inventory, 12/31/2022SalesPurchasesOperating expensesDividends paidIntercompany sales are as follows:YearNature2020202020212021DownstreamUpstreamDownstreamUpstream500,000450,0007,250,0004,500,0001,872,600225,000Selling Price650,000250,000425,000300,000Subsidiary325,000350,0004,750,0003,000,0001,028,400100,000Cost520,000187,500297,500195,000Sold at year-end75%80%60%90%

Consolidated accounts are prepared when a company (Holding Company) holds more than 50% of the…

Answered: Selected financial data are available…

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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Parent Company acquired 80% of the ordinary shares of Subsidiary Company at a time when Subsidiary’s book values and fair values were equal. Selected financial data are available for 2022 (see image below).

Intercompany sales are as follows (see image below).

How much is the Consolidated Net Income?

please explain.

Selected financial data are available for 2022:
Parent
Inventory, 01/01/2022
Inventory, 12/31/2022
Sales
Purchases
Operating expenses
Dividends paid
Intercompany sales are as follows:
Year
Nature
2020
2020
2021
2021
Downstream
Upstream
Downstream
Upstream
500,000
450,000
7,250,000
4,500,000
1,872,600
225,000
Selling Price
650,000
250,000
425,000
300,000
Subsidiary
325,000
350,000
4,750,000
3,000,000
1,028,400
100,000
Cost
520,000
187,500
297,500
195,000
Sold at year-end
75%
80%
60%
90%

Definition Definition Financial journal in which only cash-related transactions are recorded. Cash transactions are posted chronologically in the cash book, which is also called a subsidiary book. All the cash receipts are recorded on the debit side and all the cash payments are recorded on the credit side. An important point to remember is that the cash book never shows a credit balance; only a debit balance is shown in the cash book.

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