Pot Co. holds 90% of the common stock of Skillet Co.
Question # 00021745
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Updated on: 08/02/2014 06:20 AM Due on: 08/20/2014
. Pot Co. holds 90% of the common stock of Skillet Co. During 2011, Pot reported
sales of $1,120,000 and cost of goods sold of $840,000. For this same period,
Skillet had sales of $420,000 and cost of goods sold of $252,000.
Included in the amounts for Skillet's sales were Skillet's sales of
merchandise to Pot for $140,000. There were no sales from Pot to Skillet.
Intra-entity sales had the same markup as sales to outsiders. Pot still had
40% of the intra-entity sales as inventory at the end of 2011. What are
consolidated sales and cost of goods sold for 2011?
2. Pepe, Incorporated acquired 60% of Devin Company on January 1, 2010. On that
date Devin sold equipment to Pepe for $45,000. The equipment had a cost of
$120,000 and accumulated depreciation of $66,000 with a remaining life of 9
years. Devin reported net income of $300,000 and $325,000 for 2010 and 2011,
respectively. Pepe uses the equity method to account for its investment in
Devin.
3. Edgar Co. acquired 60% of Stendall Co. on January 1, 2011. During 2011, Edgar
made several sales of inventory to Stendall. The cost and selling price of the
goods were $140,000 and $200,000, respectively. Stendall still owned
one-fourth of the goods at the end of 2011. Consolidated cost of goods sold
for 2011 was $2,140,000 because of a consolidating adjustment for intra-entity
sales less the entire profit remaining in Stendall's ending inventory.
How would non-controlling interest in net income have differed if the
transfers had been for the same amount and cost, but from Stendall to Edgar?
4. On January 1, 2010, Smeder Company, an 80% owned subsidiary of Collins, Inc.,
transferred equipment with a 10-year life (six of which remain with no salvage
value) to Collins in exchange for $84,000 cash. At the date of transfer,
Smeder's records carried the equipment at a cost of $120,000 less accumulated
depreciation of $48,000. Straight-line depreciation is used. Smeder reported
net income of $28,000 and $32,000 for 2010 and 2011, respectively. All net
income effects of the intra-entity transfer are attributed to the seller for
consolidation purposes. What is the net effect on consolidated net income in
2010 due to the equipment transfer?
sales of $1,120,000 and cost of goods sold of $840,000. For this same period,
Skillet had sales of $420,000 and cost of goods sold of $252,000.
Included in the amounts for Skillet's sales were Skillet's sales of
merchandise to Pot for $140,000. There were no sales from Pot to Skillet.
Intra-entity sales had the same markup as sales to outsiders. Pot still had
40% of the intra-entity sales as inventory at the end of 2011. What are
consolidated sales and cost of goods sold for 2011?
2. Pepe, Incorporated acquired 60% of Devin Company on January 1, 2010. On that
date Devin sold equipment to Pepe for $45,000. The equipment had a cost of
$120,000 and accumulated depreciation of $66,000 with a remaining life of 9
years. Devin reported net income of $300,000 and $325,000 for 2010 and 2011,
respectively. Pepe uses the equity method to account for its investment in
Devin.
3. Edgar Co. acquired 60% of Stendall Co. on January 1, 2011. During 2011, Edgar
made several sales of inventory to Stendall. The cost and selling price of the
goods were $140,000 and $200,000, respectively. Stendall still owned
one-fourth of the goods at the end of 2011. Consolidated cost of goods sold
for 2011 was $2,140,000 because of a consolidating adjustment for intra-entity
sales less the entire profit remaining in Stendall's ending inventory.
How would non-controlling interest in net income have differed if the
transfers had been for the same amount and cost, but from Stendall to Edgar?
4. On January 1, 2010, Smeder Company, an 80% owned subsidiary of Collins, Inc.,
transferred equipment with a 10-year life (six of which remain with no salvage
value) to Collins in exchange for $84,000 cash. At the date of transfer,
Smeder's records carried the equipment at a cost of $120,000 less accumulated
depreciation of $48,000. Straight-line depreciation is used. Smeder reported
net income of $28,000 and $32,000 for 2010 and 2011, respectively. All net
income effects of the intra-entity transfer are attributed to the seller for
consolidation purposes. What is the net effect on consolidated net income in
2010 due to the equipment transfer?
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Rating:
/5
Solution: Pot Co. holds 90% of the common stock