A few years ago, Posey Ltd. acquired 90 percent of the common shares of Suba Co. In February 2000, Suba purchased goods for$12,000 and in April 20X0, sold them to Posey for $15,000. Suba's usual gross margin is 25 percent, but it gave Posey a discount, In July20X0, Posey sold 60 percent of those goods to one of its customers for $12,000. The rest of the goods remain unsold at the end of theyear. Both Posey and Suba have income tax rates of 40 percent.To calculate the income tax expense for the consolidated income statement, add together the income tax expense from Posey andSuba's separate-entity income statements and reduce by a net adjustment ofa. $0.Ob. $384.Oc. $480.d. $600.

Name: A few years ago, Posey Ltd. acquired 90 percent of the common shares
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: A few years ago, Posey Ltd. acquired 90 percent of the common shares of Suba Co. In February 2000, Suba purchased goods for$12,000 and in April 20X0, sold them to Posey for $15,000. Suba's usual gross margin is 25 percent, but it gave Posey a discou

Posey Co. acequired 90% shares of Suba Co in 20X0 . So Suba became…

Answered: years ago, Posey Ltd. acc $12.000 and

Business

Accounting

years ago, Posey Ltd. acc $12.000 and

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Padlock Corp. owns 90 percent of Safeco, Inc. During the year, Padlock sold 3,000 locking mechanisms to Safeco for $900,000. By the end of the year, Safeco had sold all but 500 of the locking mechanisms to outside parties. Padlock marks up the cost of its locking mechanisms by 60 percent in computing its sales price to affiliated and nonaffiliated customers. How much intra-entity profit remains in Safeco’s inventory at year-end?
Palm Company owns 100% of Soso Company. During year X1, Soso sold merchandise costing $50,000 to Palm for $80,000. As of 12/31/X1, 40% of the merchandise remained in Palm's inventory. Assuming that Soso reported a $100,000 net income an paid $20,000 of dividends in year X1, how much investment income should should Palm recognize in year X1?
In 20X6, Vines Inc. (Vines) purchased 40% of the common shares of Bottles Inc. (Bottles). At the time, there were no fair value differentials. In 20X7, Vines sold inventory to Bottles for $80,000. $25,000 of this remained at year end. This inventory was sold by Bottles in 20X8. Also during 20X8, Vines sold additional inventory to Bottles for $60,000 of which $30,000 remains in inventory. Vines earns a gross profit of 30% on sales of its inventory. Both companies pay income taxes at 25%. During 20X8, Bottles earned net income of $200,000. What is the amount of equity income reported by Vines in 20X8? A. $79,400 B. $79,550 C. $80,000 D. $80,450
BB Inc., acquired a 60 percent interest in HH Company several years ago. During 20x7, HH sold inventory costing P75,000 to BB for P100,000. A total of 16 percent of this inventory was not sold to outsiders until 20x8. During 20x8, HH sold inventory costing P96,000 to BB for P120,000. A total of 35 percent of this inventory was not sold to outsiders until 20x9. In 20x8, BG reported cost of goods sold of P380, 000 while HH reported P210.000. What is the consolidated cost of goods sold in 20x8?
Tala Co. owns an 80% interest in Kilometro Inc., acquired several years ago. Kilometro regularly sells merchandise to its parent at 125% of its cost. Gross profit data of Tala and Kilometro for the year 2018 are: Sales Tala- 2,500,000 Kilometro- 1,800,000 Cost of Sales Tala 1,800,000 Kilometro- 1,240,000 During 2018, Tala purchased inventory items from Kilometro at a transfer price of 400,000. Tala December 31, 2017 and 2018 inventories were 500,000 and 600,000 respectively, which included goods acquired from Kilometro of 125,000 and 100,000 respectively. The inventory of Kilometro at the beginning and end of 2018 were 350,000 and 400,000 respectively. As of December 31, 2018, 60% of the year's shipment is not yet paid by Tala. 1. What is the consolidated cost of sales? 2. What amount of Inventory is reported in the consolidated balance sheet at December 31, 2018?
Tala Co. owns an 80% interest in Kilometro Inc., acquired several years ago. Kilometro regularly sells merchandise to its parent at 125% of its cost. Gross profit data of Tala and Kilometro for the year 2018 are:SalesTala- 2,500,000Kilometro- 1,800,000Cost of SalesTala- 1,800,000Kilometro- 1,240,000During 2018, Tala purchased inventory items from Kilometro at a transfer price of 400,000. Tala December 31, 2017 and 2018 inventories were 500,000 and 600,000 respectively, which included goods acquired from Kilometro of 125,000 and 100,000 respectively. The inventory of Kilometro at the beginning and end of 2018 were 350,000 and 400,000 respectively. As of December 31, 2018, 60% of the year’s shipment is not yet paid by Tala.what amount of inventory is reported in the consolidated balance sheet at December 31, 2018?
Goddy Company owns 80% of the common stock of Morris, Inc. In the current year, Goddy reports sales of $10,000,000 and cost of goods sold of $7,500,000. For the same period, Morris has sales of $200,000 and cost of goods sold of $160,000. During the year, Goddy sold merchandise to Morris for $60,000 at a price based on the normal markup. At the end of the year, Morris still possesses 30 percent of this inventory. Compute consolidated cost of goods so ld. Select one: a. $7,604,500. b. $7,500,000. c. $7,660,000. d. $7,615,000. e. $7,600,000.
Acker Company bought 100% of Howell Company on 1/1/X1 for $1,440,000 and began applying the equity method. The book value of Howell's equity on that date was $1,440,000. In year X1, Howell reported net income of $100,000 and paid $40,000 in dividends. During year X1, Howell sold 1,000 units of inventory to Acker for $20,000 that had cost $10,000. On 12/31/X1, 400 of the units remained in Acker's inventory. How much investment income should Acker report in year X1
Hide Corporation is a wholly owned subsidiary of Seek Company. During 2015, Hide sold all of its production to Seek Company for $400,000, a price that includes a 25% gross profit. 2015 was the first year that such intercompany sales were made. By year-end, Seek sold, for $416,000, 80% of the goods it had purchased. The balance of the intercompany goods, $80,000, remained in the ending inventory and was adjusted to a lower fair value of $70,000. The adjustment was a charge to the cost of goods sold.1. Determine the gross profit on sales recorded by both companies.2. Determine the gross profit to be shown on the consolidated income statement.
Rommel, Inc. acquired a 60% interest in Mikee Company several years ago. During 2020, Mikee sold inventory costing P75,000 to Rommel for P100,000. A total of 16% of this inventory was not sold to outsider until 2021. During 2021, Mikee sold inventory costing P96,000 to Rommel for P120,000. A total of 35% of this inventory was not sold to outsiders until 2022. In 2021, Rommel reported cost of sales of P380,000 while Mikee reported P210,000. What is the consolidated cost of sales?a. 522,400b. 474,400c. 473,400d. 594,400
Thompson owns 100% of Rollins and at December 31, 2012, its Investment in Rollins account stands at $10,000,000. On that date, Thompson sells 20% of its ownership for $2,500,000 cash. a. Prepare the journal entry to.be recorded by Thompson on December 31, 2012. b. Same facts as above, except the sales price is $1,000,000 cash. Prepare the journal entry to be recorded by Thompson on December 31, 2012.
Boboy, Inc. acquired 60 percent interest in Homer Co. several years ago. During 2020, Homer sold inventory costing P75,000 to Boboy for P100.000. A total of 16 percent of this inventory was not sold to outsider until 2021. During 2021, Homer sold inventory costing P96,000 to Boboy for P120,000. A total of 35 percent of this inventory was not sold to outsiders until 2022. In 2021, Boboy reported cost of sales of P380,000 while Homer reported P210,000. What is consolidated cost of sales?