Академический Документы
Профессиональный Документы
Культура Документы
Question 1
Student notes mind map
Parent Company Pepper Ltd
o Parent sold $97,500 to Subsidiary (downstream)
COGS - $65,000, 50% remaining inventory
Intercompany profit = 97,500-65,000 =32,500
Subsidiary = Salt Ltd.
o Common Share $300,000
o Retained Earning $1,280,000
o Subsidiary sold $45,000 to parent
Gross profit 40%, 20% remaining
Purchased 75% of company for $1,275,000
Tax Rate = 30%
$2,000 Impairment for goodwill
Attributed to:
Peppers Shareholder 300,735
Non-controlling interest 33,870
Pepper
Consolidated Statement of Retained earnings,
For the year ended Dec 31, 2015
Retained Earning, January 1 2,459,500
Add: Net Income 300,735
Less: Dividends Paid $150,000
Retained Earnings, Dec 31 2,610,235
Question 14.A)
Acquisition cost Allocation
Acquisition January 1, year 1
Amortization Table
Accounts Allocation Balance Year 1 Year 4 Year 5 Balance
December 31, year 5
Inventory (1) 100,000 Cr 100,000 cr 0 0
Land 200,000 dr 0 0 200,000 dr
Equipment 200,000 cr 80,000 cr 20,000 cr 100,000 cr
(10)
Patent (5) 400,000 dr 320,000 dr 80,000 dr 0
Long-Term 100,000 cr 100,000 cr 0 0
Liability (4)
Goodwill 600,000 dr 0 0 600,000 dr
Total 800,000 dr 40,000 dr 60,000 dr 700,000 dr
Intercompany Profit
Attributable to:
Shareholders of Vine 3,768,000
Non-controlling interest 401,000
$4,169,000
Notes:
Sales = $11,600,000 + $3,000,000 - $3,200,000(a) = $11,400,000
Sales = (Parents + Subsidiary (a))
Dividends& investment income = ($400,000 + $1,000,000 - $375,000(c) 400,000)
= $625,000
Dividends & investment income = (Parents + Subsidiary (c) (d))
Cost of goods Sold = $8,000,000+1,500,000-3,200,000(a)-140,00+400,000)=
$6,560,000 *From Unrealized profit before tax
Costs of Goods Sold = (Parents + Subsidiary (a) opening inventory + ending
inventory)
Other Expenses = $500,000+300,000-20,000+80,000 = $860,000
Other Expense = (Parents + Subsidiary equipment + patent)
Income Tax expense = $500,000+200,000+56,000-160,000 = $436,000
Income tax expense = (Parents + Subsidiary + 56,00 160,000)
Non-controlling interest = (2,000,000-240,000-120,000-60,000+24,000)*25% =
401,000
Non-controlling interest = [(Subsidiarys net income After tax of land (upstream)
ending inventory (upstream) + Open Inventory (upstream)] * 25% non-controlling
share.
C)
Consolidated Retained Earnings Schedule
Calculation:
Inventory = Parents + Subsidiary Closing inventory (Subsidiary + Parents)
= 4,600,000+2,400,000-400,000
Plant & Equipment = Parents + Subsidiary accumulated depreciation equipment
= 18,800,000+11,800,000-200,000+500,000 = $29,900,000
Cash & Current receivable = Parents + Subsidiary = $900,000+300,000 = $1,200,000
Land = Parents + Subsidiary + Land (Balance ADA) $400,000 (intercompany)
= $6,000,000 + 2,500,000 + 200,000 - $400,000 = $8,300,000
Goodwill = $600,000
Accumulated depreciation = Parents + subsidiary - $500,000(accumulated)-
100,000(equipment) = -10,200,000
Deferred Income tax = $160,000 (land) + after tax ending ($160,000) = $320,000
Ordinary Share = Given, $10,000,0000
Retained earning = Calculated in part C, $15,210,000
Long term liability = (Parents + Subsidiary) = $6,600,000+1,100,000 = $7,700,000
Current Liability = (Parents + Subsidiary - $200,000k advance) = $800,000