Chapter 7, Problem 7.27P

To determine

Intercompany sales:An intercompany sales normally is recorded on the books of the selling affiliate in the same manner as any other sales, including recording of profit or loss. The unrealized profit on intercompany sales are omitted under the modified equity method.

Requirement 1

Amount paid by P to S on sale of building.

b.

To determine

Intercompany sales:An intercompany sales normally is recorded on the books of the selling affiliate in the same manner as any other sales, including recording of profit or loss. The unrealized profit on intercompany sales are omitted under the modified equity method.

Requirement 2

The amount accumulated depreciation did S reports on January 1 20X7.

c.

To determine

Intercompany sales:An intercompany sales normally is recorded on the books of the selling affiliate in the same manner as any other sales, including recording of profit or loss. The unrealized profit on intercompany sales are omitted under the modified equity method.

Requirement 3

Amount of annual depreciation S recorded prior to sale.

d.

To determine

Intercompany sales:An intercompany sales normally is recorded on the books of the selling affiliate in the same manner as any other sales, including recording of profit or loss. The unrealized profit on intercompany sales are omitted under the modified equity method.

Requirement 4

The residual value of building

e.

To determine

Intercompany sales:An intercompany sales normally is recorded on the books of the selling affiliate in the same manner as any other sales, including recording of profit or loss. The unrealized profit on intercompany sales are omitted under the modified equity method.

Requirement 5

Amount of depreciation expense did P record in 20X7.

f.

To determine

Intercompany sales:An intercompany sales normally is recorded on the books of the selling affiliate in the same manner as any other sales, including recording of profit or loss. The unrealized profit on intercompany sales are omitted under the modified equity method.

Requirement 6

The income assigned to non-controlling interest when net income is $80,000.

g.

To determine

Intercompany sales:An intercompany sales normally is recorded on the books of the selling affiliate in the same manner as any other sales, including recording of profit or loss. The unrealized profit on intercompany sales are omitted under the modified equity method.

Requirement 7

The income assigned to non-controlling interest when net income is $65,000.