In: Accounting
On January 1, 20X1, Pride, Inc. acquired 80% of the outstanding voting common stock of Strong Corp. for $364,000. On this date, equipment (with a five-year life) was undervalued on Strong's books by $35,000. Any remaining excess was attributable to goodwill. As of December 31, 20X1, the financial statements appeared as follows:
Pride | Strong | ||
Revenues | $420,000 | $280,000 | |
Cost of Goods Sold | 196,000 | 112,000 | |
Operating Expenses | 28,000 | 14,000 | |
Investment Income | 100,800 | ||
Net Income | $296,800 | $154,000 | |
Retained Earnings, 1/1/20X1 | $420,000 | $210,000 | |
Net Income (From Above) | 296,800 | 154,000 | |
Dividends | 0 | 0 | |
Retained Earnings, 12/31/20X1 | $716,800 | $364,000 | |
Cash and Receivables | $294,000 | $126,000 | |
Inventory | 210,000 | 154,000 | |
Investment in Strong | 464,800 | ||
Equipment (net) | 616,000 | 420,000 | |
Total Assets | $1,584,800 | $700,000 | |
Liabilities | $588,000 | $196,000 | |
Common Stock | 280,000 | 140,000 | |
Retained Earnings, 12/31/20X1 | 716,800 | 364,000 | |
Total Liabilities and Equity | $1,584,800 | $700,000 |
During 20X1, Pride bought inventory for $112,000 and sold it to Strong for $140,000; 60% of these goods were unsold on December 31, 20X1. Only half of this purchase had been paid for by Strong by the end of the year.
What is the consolidated total for equipment (net) at December 31, 20X1?
A.) $952,000.
B.) $1,058,400.
C.) $1,069,600.
D.) $1,064,000.
E.) $1,066,800.
On January 1, 20X1, Pride, Inc. acquired 80% of the outstanding voting common stock of Strong Corp. for $364,000. On this date, equipment (with a five-year life) was undervalued on Strong's books by $35,000. Any remaining excess was attributable to goodwill. As of December 31, 20X1, the financial statements appeared as follows:
Pride | Strong | ||
Revenues | $420,000 | $280,000 | |
Cost of Goods Sold | 196,000 | 112,000 | |
Operating Expenses | 28,000 | 14,000 | |
Investment Income | 100,800 | ||
Net Income | $296,800 | $154,000 | |
Retained Earnings, 1/1/20X1 | $420,000 | $210,000 | |
Net Income (From Above) | 296,800 | 154,000 | |
Dividends | 0 | 0 | |
Retained Earnings, 12/31/20X1 | $716,800 | $364,000 | |
Cash and Receivables | $294,000 | $126,000 | |
Inventory | 210,000 | 154,000 | |
Investment in Strong | 464,800 | ||
Equipment (net) | 616,000 | 420,000 | |
Total Assets | $1,584,800 | $700,000 | |
Liabilities | $588,000 | $196,000 | |
Common Stock | 280,000 | 140,000 | |
Retained Earnings, 12/31/20X1 | 716,800 | 364,000 | |
Total Liabilities and Equity | $1,584,800 | $700,000 |
During 20X1, Pride bought inventory for $112,000 and sold it to
Strong for $140,000; 60% of these goods were unsold on December 31,
20X1. Only half of this purchase had been paid for by Strong by the
end of the year.
What is the consolidated total for inventory at December
31, 20X1?
A.) $336,000.
B.) $280,000.
C.) $364,000.
D.) $347,200.
E.) $349,300.
Presented below are several figures reported for Post Inc. and Mitchell Co. as of December 31, 20X2:
Post | Mitchell | |
Inventory | $200,000 | $100,000 |
Sales | 450,000 | 250,000 |
Cost of Goods Sold | 250,000 | 190,000 |
Expenses | 90,000 | 50,000 |
Post Inc. acquired 80% of Mitchell Co.'s outstanding common
stock on January 1, 20X1. The entire difference between the amount
paid and the fair value of Mitchell's net assets is attributed to a
previously unrecorded patent with a fair value of $112,500. The
patent is being amortized over 20 years. During 20X1, Mitchell sold
Post inventory costing $60,000 for $70,000. 30% of this inventory
was not sold to external parties until the following year. During
the second year, Mitchell sold inventory costing $90,000 to Post
for $115,000. Of this inventory, 25% remained unsold on December
31, 20X2.
What is the amount of consolidated cost of goods sold for
20X2?
A.) $440,000
B.) $331,250
C.) $328,250
D.) $321,750
E.) $443,250
On January 1, 20X1, Pride, Inc. acquired 80% of the outstanding voting common stock of Strong Corp. for $364,000. On this date, equipment (with a five-year life) was undervalued on Strong's books by $35,000. Any remaining excess was attributable to goodwill. As of December 31, 20X1, the financial statements appeared as follows:
Pride | Strong | ||
Revenues | $420,000 | $280,000 | |
Cost of Goods Sold | 196,000 | 112,000 | |
Operating Expenses | 28,000 | 14,000 | |
Investment Income | 100,800 | ||
Net Income | $296,800 | $154,000 | |
Retained Earnings, 1/1/20X1 | $420,000 | $210,000 | |
Net Income (From Above) | 296,800 | 154,000 | |
Dividends | 0 | 0 | |
Retained Earnings, 12/31/20X1 | $716,800 | $364,000 | |
Cash and Receivables | $294,000 | $126,000 | |
Inventory | 210,000 | 154,000 | |
Investment in Strong | 464,800 | ||
Equipment (net) | 616,000 | 420,000 | |
Total Assets | $1,584,800 | $700,000 | |
Liabilities | $588,000 | $196,000 | |
Common Stock | 280,000 | 140,000 | |
Retained Earnings, 12/31/20X1 | 716,800 | 364,000 | |
Total Liabilities and Equity | $1,584,800 | $700,000 |
During 20X1, Pride bought inventory for $112,000 and sold it to Strong for $140,000; 60% of these goods were unsold on December 31, 20X1. Only half of this purchase had been paid for by Strong by the end of the year.
What is the consolidated total of non-controlling interest appearing in the balance sheet on 12/31/20X1?
A.) $100,800.
B.) $97,440.
C.) $93,800.
D.) $120,400.
E.) $117,040.
1. Answer is option D.) $1,064,000.
Book value Parent's Equipment $616,000 + Book value Sub's Equipment $420,000 + Fair value Equipment Increase at Acquisition $35,000 - First Year Excess Amortization of Fair value ($35,000/5) $7,000 = $1064000
2. Answer is option D.) $347,200
Book value Parent's Inventory $210,000 + Book value Sub's Inventory $154,000 - Unrealized Profit on Inventory Transfer ($28,000 × 60%) $16,800 = $347,200
3. Answer is option C.) $328,250
Cost of goods sold-Post Inc = 250,000
Cost of goods sold-Mitchell Co. = 190,000
Elimination of current year intercompany purchases ($25,00x25%) = (115,000)
Deferral of current year unrealized gross profit ($10,000x30%) = (3,000)
Thus,
Consolidated cost of goods sold for current year = $328,250
4. Answer is option D.) $120,400
$364,000/80% = $455,000
Net Income = ($154,000 - $7,000) = $147,000
Total = $602,000
Non controlling interest = 602000*20%=120400