Please explain your reasoning for finding the solution! Zooming in helps to see the information! Thanks in advance! :)Do not Give Solution in image format The unsold inventory at the end of a given year is sold to unaffiliated entities outside of the consolidated group during the next year. The parent uses the cost method of pre-consolidation Equity Investment bookkeeping.The balances of the subsidiary's retained earnings on December 31 of 2017, 2018 and 2019 were $200,500, $283,500 and $357,000, respectively. The subsidiary's net income for the year ended December 31, 2019 was $84,000. Thesubsidiary paid $1,000 and $10.500 for dividends in 2018 and 2019.The amount of income from subsidiary for year 2019 recorded on the parent company's pre-consolidation bookSelect one:O a. 0O0Ob. 7500 *c. 13500d. 10500e. 4500Your answer is incorrect.The correct answer is: 10500 A parent company acquired 100% of the stock of a subsidiary company on January 1, 2016, for $560,000. On this date, the balances of the subsidiary's stockholders' equity accounts were Common Stock, $35,000, Additional Paid-inCapital, $38,500, and Retained Earnings, $136,500. On the acquisition date, the excess was assigned to the following AAP assets:Original AmountOriginal Useful Life10 years8 years8 yearsIndefiniteProperty, plant &equipmentCustomer listRoyalty agreementGoodwill$140,00070,00056,00084,000The Goodwill asset has not been found to be impaired.The parent company started selling inventory to the subsidiary in 2018. The subsidiary, ultimately, sells the inventory to customers outside of the consolidated group. You have compiled the following data for the years ending 2018and 2019:Inventory Gross Profit Remaining in ReceivableSalesUnsold Inventory(Payable)2019 $42,000$19,6002018$28,000$10,500$5,600$7,350The unsold inventory at the end of a given year is sold to unaffiliated entities outside of the consolidated group during the next year. The parent uses the cost method of pre-consolidation Equity Investment bookkeeping.The balances of the subsidiary's retained earnings on December 31 of 2017, 2018 and 2019 were $200,500, $283,500 and $357,000, respectively. The subsidiary's net income for the year ended December 31, 2019 was $84,000. Thesubsidiary paid $1,000 and $10,500 for dividends in 2018 and 2019.The amount of income from subsidiary for year 2019 recorded on the parent company's pre-consolidation book.

A parent company and subsidiary company relationship exists when one company, known as the parent…

The unsold inventory at the end of a given year is sold to unaffiliated entities outside of the consolidated group during the next year. The parent uses the cost method of pre-consolidation Equity Investment bookkeeping. The balances of the subsidiary's retained earnings on December 31 of 2017, 2018 and 2019 were $200,500, $283,500 and $357,000, respectively. The subsidiary's net income for the year ended December 31, 2019 was $84,000. The subsidiary paid $1,000 and $10.500 for dividends in 2018 and 2019. The amount of income from subsidiary for year 2019 recorded on the parent company's pre-consolidation book. Select one: C a. 0 © O O b. 7500 x c. 13500 d. 10500 e. 4500

The unsold inventory at the end of a given year is sold to unaffiliated entities outside of the consolidated group during the next year. The parent uses the cost method of pre-consolidation Equity Investment bookkeeping. The balances of the subsidiary's retained earnings on December 31 of 2017, 2018 and 2019 were $200,500, $283,500 and $357,000, respectively. The subsidiary's net income for the year ended December 31, 2019 was $84,000. The subsidiary paid $1,000 and $10.500 for dividends in 2018 and 2019. The amount of income from subsidiary for year 2019 recorded on the parent company's pre-consolidation book. Select one: C a. 0 © O O b. 7500 x c. 13500 d. 10500 e. 4500

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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