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In: Accounting

On January 1, 20x2, Platte Company purchased 90 percent of the common stock of River Company....

  1. On January 1, 20x2, Platte Company purchased 90 percent of the common stock of River Company. During 20x2, River sold inventory to Platte for $1,000,000. The cost of the inventory to River was $800,000. By the end of 20x2, 20% of the inventory had not been resold by Platte; that inventory was resold to unrelated parties during 20x3. Both companies use perpetual inventory systems.

           

The results of operations for the year 20x2 for the two companies are as follows:

20X2 Operating Income for Platte $1,750,000
20X2 Net Income for River 1,100,000
Total $2,850,000

Required:

            (a.) Give the entry needed in a three-part consolidation workpaper prepared at the end of 20x2 to eliminate the effects of the intercompany inventory transfer.

            (b.) Compute 20x2 consolidated net income.

            (c.) Compute the amount of income assigned to the noncontrolling interest in 20x2.

            (d). Compute the amount of income assigned to the controlling interest in 20x2.

           

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Expert Solution

ekkarill92 answered 2 years ago
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