Intercompany sales:An intercompany sale normally is recorded on the books of the selling affiliated in the same manner as any other sales, including recording of profit or loss. The unrealized profit on intercompany sales is omitted under the modified equity method.
Requirement 1
Consolidation entries needed to eliminate the effects of the intercompany sales of building.
b.
Intercompany sales:An intercompany sale normally is recorded on the books of the selling affiliated in the same manner as any other sales, including recording of profit or loss. The unrealized profit on intercompany sales is omitted under the modified equity method.
Requirement 2
Computation of amount reported to consolidated net income and income to be allocated to controlling interest.
c.
Intercompany sales:An intercompany sale normally is recorded on the books of the selling affiliated in the same manner as any other sales, including recording of profit or loss. The unrealized profit on intercompany sales is omitted under the modified equity method.
Requirement 3
Consolidation entry needed to eliminate effect of intercompany sale of building in preparing consolidated financial statement for the year 20X8.
d.
Intercompany sales:An intercompany sale normally is recorded on the books of the selling affiliated in the same manner as any other sales, including recording of profit or loss. The unrealized profit on intercompany sales is omitted under the modified equity method.
Requirement 2
Computation of consolidated net income and amount of income assigned to controlling shareholder in consolidated income statement 20X7.
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Chapter 7 Solutions
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