LOOSE-LEAF Advanced Financial Accounting with Connect
11th Edition
ISBN: 9781259605192
Author: Theodore E. Christensen
Publisher: McGraw-Hill Education
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Chapter 6, Problem 6.22P
a.
To determine
Introduction:
Consolidating entries to complete a consolidated worksheet for 20X8
a.
Expert Solution
Explanation of Solution
Journal entries
| S.no | Date | Particulars | Debit | Credit |
| 1 | Income from subsidiary | $32,000 | ||
| Income from SF stock | $32,000 | |||
| (To record C’s 80% share of S’s income) | ||||
| 2 | Income to non- controlling interest | $9,000 | ||
| Non-controlling interest | $9,000 | |||
| (To record non-controlling interest of net income of S) | ||||
| 3 | Common stock- SF | $90,000 | ||
| $220,000 | ||||
| Investment in SF stock | $248,000 | |||
| Non- controlling stock | $62,000 | |||
| (To record basic elimination entry) | ||||
| 4 | Retained earnings as on Jan 1 | $16,000 | ||
| Non-controlling interest | $4,000 | |||
| Cost of goods sold | $20,000 | |||
| (To record reversal of the deferred gross profit) | ||||
| 5 | Sales | $150,000 | ||
| Cost of goods sold | $135,000 | |||
| Inventory | $15,000 | |||
| To eliminate the unrealized inventory profit) |
- Recording the eliminating entry for elimination of income from subsidiary.
- Recording the eliminating entry for assigning income to non-controlling interest.
- Recording the eliminating entry for elimination of beginning investment balance.
- Recording the eliminating entry for elimination of beginning inventory profit.
- Recording the eliminating entry for elimination of unrealized inventory profit.
b.
To determine
Introduction: The consolidated income is the difference between the sum of the total operating income of the parent company and the net income of the subsidiary and the unrealized inventory profits of the two. The income assigned to controlling interest is the difference between income assigned to non-controlling interest and the consolidated net income.
The amount reported as consolidated net income and income assigned to the controlling interest.
b.
Expert Solution
Answer to Problem 6.22P
The consolidated net income is $90,000
The income assigned to controlling interest is $81,000
Explanation of Solution
Consolidated net income
| Particulars | Amount | Amount |
| Operating income of CA | $45,000 | |
| Net income of SF | $40,000 | |
| Total income | $85,000 | |
| inventory profits realized in 20X7 | $20,000 | |
| Unrealized inventory profits for 20X8 | ($15,000) | |
| Consolidated net income | $90,000 |
Income assigned to controlling interest
| Particulars | Amount |
| Consolidated net income | $90,000 |
| Less: income assigned to non- controlling interest | ($9,000) |
| Income assigned to controlling interest | $81,000 |
c.
To determine
Introduction: A non-controlling interest refers to an ownership position in which the shareholders hold less than 50 percent of the total shares in the company and have no control over its decisions.
Income assigned to non- controlling shareholders.
c.
Expert Solution
Answer to Problem 6.22P
Income assigned to non-controlling shareholders is $67,000.
Explanation of Solution
| Particulars | Amount |
| Common stock | $90,000 |
| Retained earnings | $260,000 |
| Less: unrealized inventory profit | ($15,000) |
| Proportion of stock held by non-controlling interest | 20% |
| Income assigned to non- controlling shareholders | $67,000 |
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A-1
Pie Corporation acquired 60 percent of Slice Company’s common stock on December 31, 20X5, at underlying book value. The book values and fair values of Slice’s assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 40 percent of the total book value of Slice. Slice provided the following trial balance data at December 31, 20X5:
Debit
Credit
Cash
$ 27,600
Accounts Receivable
64,900
Inventory
91,600
Buildings and Equipment (net)
216,000
Cost of Goods Sold
103,300
Depreciation Expense
24,450
Other Operating Expenses
31,060
Dividends Declared
15,800
Accounts Payable
$ 32,000
Notes Payable
127,000
Common Stock
94,800
Retained Earnings
130,000
Sales
190,910
Total
$ 574,710
$ 574,710
Required:
How much did Pie pay to purchase its shares of Slice?
Note: Round your answer to nearest whole dollar amount.
If consolidated financial statements are prepared at December 31, 20X5, what amount…
Chapter 6 Solutions
LOOSE-LEAF Advanced Financial Accounting with Connect
Ch. 6 - Why must inventory transfers to related companies...Ch. 6 - Why is there a need for a consolidation entry when...Ch. 6 - Prob. 6.3QCh. 6 - How do unrealized intercompany profits on a...Ch. 6 - How do unrealized intercompany profits on an...Ch. 6 - Prob. 6.6QCh. 6 - Prob. 6.9QCh. 6 - Prob. 6.10QCh. 6 - How is the amount of consolidated retained...Ch. 6 - How will the elimination of unrealized...
Ch. 6 - Prob. 6.14QCh. 6 - Is an inventory sale from one subsidiary to...Ch. 6 - Prob. 6.16QCh. 6 - Prob. 6.1.1ECh. 6 - Prob. 6.1.2ECh. 6 - MultipleChoice Questions on Intercompany Inventory...Ch. 6 - MultipleChoice Questions on Intercompany Inventory...Ch. 6 - Prob. 6.1.5ECh. 6 - Prob. 6.1.6ECh. 6 - Prob. 6.3.1ECh. 6 - Prob. 6.3.2ECh. 6 - Prob. 6.3.3ECh. 6 - Prob. 6.4.1ECh. 6 - Prob. 6.4.2ECh. 6 - Prob. 6.4.3ECh. 6 - Prob. 6.4.4ECh. 6 - Prob. 6.5.1ECh. 6 - Prob. 6.5.2ECh. 6 - Prob. 6.5.3ECh. 6 - Prob. 6.7ECh. 6 - Prob. 6.8ECh. 6 - Prob. 6.9ECh. 6 - Prob. 6.10ECh. 6 - Prob. 6.11ECh. 6 - Prob. 6.12ECh. 6 - Prob. 6.13ECh. 6 - Prob. 6.15ECh. 6 - Prior-Period Inventory Profits Home Products...Ch. 6 - Prob. 6.17PCh. 6 - Prob. 6.18PCh. 6 - Prob. 6.19PCh. 6 - Prob. 6.20PCh. 6 - Prob. 6.21PCh. 6 - Prob. 6.22PCh. 6 - Prob. 6.24PCh. 6 - Prob. 6.26PCh. 6 - Prob. 6.27PCh. 6 - Prob. 6.28PCh. 6 - Prob. 6.29PCh. 6 - Prob. 6.30PCh. 6 - Prob. 6.31PCh. 6 - Prob. 6.33PCh. 6 - Prob. 6.34PCh. 6 - Prob. 6.35APCh. 6 - Prob. 6.36AP
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