Penmac owns 70% of the stock of snappy sales inc. During 2018 one company produced 5,000...

Penmac owns 70% of the stock of snappy sales inc. During 2018 one company produced 5,000 charis at a cost of $80 per chair and sold to the other company 3,000 chairs at $100 each. by year end the other company had sold 2,000 of the chairs at $130 each. These are the only sales either company made

1. what amount is on the 2018 consolidated balance sheet for ending inventory?

2. If the intercompany sales were upstream, how much gross profit would be denied to Penmac?

3. If the intercompany sales were downstream, how much gross profit would be denied to Penmac?

Expert Solution

1. The amount of ending Inventory on the 2018 consolidated balance sheet for ending inventory are:

3000 * 80 = $240,000.

2. If the intercompany sales were upstream, Penmac would denied unrealized profit of $20,000.

3. If the intercompany sales were downstream, Penmac would denied unrealized profit of $20,000.

Note that unrealized intercompany gains and losses are always fully eliminated in preparing consolidated financial statements. Only allocation happens between noncontrolling Interest and controlling Interest.

ekkarill92 answered 2 years ago

Parent Company owns a controlling share of Subsidiary company's common stock. During 2017 and 2018, Parent...

Parent Company owns a controlling share of Subsidiary company's common stock. During 2017 and 2018, Parent sold inventory to Subsidiary company. The sales and cost of sales information are detailed below. There were no intercompany sales prior to 2017. In both 2017 and 2018, Subsidiary sold 80% of the intercompany inventory purchased in that year. In 2018, all the beginning inventory was sold first. Ownership Percentage 75% 2017 intercompany sales $550,000 2018 intercompany sales $470,000 2017 Cost of Goods Sold...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2014, Hamilton sold $2,500,000 in 10-year bonds to the public at 105. The bonds had a cash interest rate of 10...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2014, Hamilton sold $1,900,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 8...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2014, Hamilton sold $1,100,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 8...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2014, Hamilton sold $2,300,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 9...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2014, Hamilton sold $1,100,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 8...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired several years ago on the date that the subsidiary was formed. Consequently, no goodwill or other allocation was recorded in connection with the acquisition. Cairns uses the equity method in its internal records to account for its investment in Hamilton. On January 1, 2014, Hamilton sold $1,100,000 in 10-year bonds to the public at 110. The bonds had a cash interest rate of 8...

Mr. Toriop owns 5,000 shares of stock in Yummy Corporation. The company has announced that it...

Mr. Toriop owns 5,000 shares of stock in Yummy Corporation. The company has announced that it will pay a dividend of $5 per share in one year and a liquidating dividend of $50 per share in two years. The required return on Yummy stock is 12%. a. What is the current share price of your stock? (1 mark) b. What will be the company’s share price in one year’s time? (1 mark) c. Mr. Toriop wishes...

Mr. Toriop owns 5,000 shares of stock in Yummy Corporation. The company has announced that it...

Mr. Toriop owns 5,000 shares of stock in Yummy Corporation. The company has announced that it will pay a dividend of $5 per share in one year and a liquidating dividend of $50 per share in two years. The required return on Yummy stock is 12% . a. What is the current share price of your stock? (1 mark) =44.32 b. What will be the company’s share price in one year’s time? (1 mark)=44.64 c. Mr. Toriop wishes to have...

P Company owns 70% of the outstanding stock of S Company. On January 1, 2011, S...

P Company owns 70% of the outstanding stock of S Company. On January 1, 2011, S Company sold land to P Company for $280,000. S had originally purchased the land on March 30, 2007, for $330,000. P Company plans to construct a building on the land bought from S in which it will house new production machinery. The estimated useful life of the building and the new machinery is 20 years. To solve: Prepare all journal entries for P and...

Question

Penmac owns 70% of the stock of snappy sales inc. During 2018 one company produced 5,000...

Solutions

Expert Solution

Related Solutions

Parent Company owns a controlling share of Subsidiary company's common stock. During 2017 and 2018, Parent...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...

Cairns owns 70 percent of the voting stock of Hamilton, Inc. The parent’s interest was acquired...

Mr. Toriop owns 5,000 shares of stock in Yummy Corporation. The company has announced that it...

Mr. Toriop owns 5,000 shares of stock in Yummy Corporation. The company has announced that it...

P Company owns 70% of the outstanding stock of S Company. On January 1, 2011, S...