Question
In: Accounting
Separate income statements of quail corp and its 80% owned subsidiary, Savannah corp, for 2016 are...
Separate income statements of quail corp and its 80% owned subsidiary, Savannah corp, for 2016 are as follows:
Quail Savannah
sales rev 800,000 300,000
gain on equipment 35,000
cost of sales (400000) (160000)
other expenses (265000) (60000)
separate incomes 135000 115000
addiitonal information:
1. quail acquired its 80% interest in savannah corporation when the book values were equal to the fair values.
2. the gain on equipment relates to eqiupment with a book value of 85000 and a 7yr remaining useful life that svannah sold to quail for 120,000 on jan 1 2016. straight line depreciaiton method is used
required:
prepare a consolidated income statement for quail corp and subsidiary for the year 2016 by preparing a consolidated wokrsheet
please show all work
Solutions
Expert Solution
| Consolidated income statement of Quail Corporation and Subsidiary for the year 2016:- | ||
| Particular | Amount in $ | |
| Sales Revenue(800,000+300,000) | $1,100,000 | |
| Less: Cost of Sales(400,000+160,000) | -$560,000 | |
| Less: Other expenses(265,000+60,000-5,000) | -$320,000 | |
| Total Income | $220,000 | |
| Less: Share of Minority Interest*** | -$16,000 | |
| Consolidated Net Income | $204,000 | |
| Working Note |
| Inter company adjustments to be made;- |
| Inter company profits elimiantion = Gain on sale of equipment = $35,000 |
| Straight line depreciation on additional value = ($120,000-$85,000)/7years= $5000 |
| Attributable to:- |
| Group(Balance) = $320,000- $16,000 =$304,000 |
| ***Non controlling interest(minority interest) = ($115,000-$35,000)*20% = $16000 |
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Following are separate income statements for Austin, Inc., and its 80 percent owned subsidiary, Rio Grande...
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Expenses
344,000
235,000
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Outstanding common shares
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Outstanding common shares
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220,000
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(246,000
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