Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2017, when Scenic had a net book value of $400,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $5,000 per year.

Placid Lake's 2018 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $300,000. Scenic reported net income of $110,000. Placid Lake declared $100,000 in dividends during this period; Scenic paid $40,000. At the end of 2018, selected figures from the two companies' balance sheets were as follows:

During 2017, intra-entity sales of $90,000 (original cost of $54,000) were made. Only 20 percent of this inventory was still held within the consolidated entity at the end of 2017. In 2018, $120,000 in intra-entity sales were made with an original cost of $66,000. Of this merchandise, 30 percent had not been resold to outside parties by the end of the year.

Each of the following questions should be considered as an independent situation for the year 2018.

What is consolidated net income for Placid Lake and its subsidiary?

If the intra-entity sales were upstream, how would consolidated net income be allocated to the controlling and noncontrolling interest?

If the intra-entity sales were downstream, how would consolidated net income be allocated to the controlling and noncontrolling interest?

What is the consolidated balance in the ending Inventory account?

Assume that no intra-entity inventory sales occurred between Placid Lake and Scenic. Instead, in 2017, Scenic sold land costing $30,000 to Placid Lake for $50,000. On the 2018 consolidated balance sheet, what value should be reported for land?

f-1. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2017, Scenic sold equipment (that originally cost $100,000 but had a $60,000 book value on that date) to Placid Lake for $80,000. At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December 31, 2018, consolidation of these two companies to eliminate the impact of the intra-entity transfer?

f-2. For 2018, what is the noncontrolling interest’s share of Scenic’s net income?

Placid Lake Corporation acquired 90 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2017, when Scenic had a net book value of $490,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $7,000 per year.

Placid Lake's 2018 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $390,000. Scenic reported net income of $200,000. Placid Lake declared $190,000 in dividends during this period; Scenic paid $49,000. At the end of 2018, selected figures from the two companies' balance sheets were as follows:

During 2017, intra-entity sales of $120,000 (original cost of $60,000) were made. Only 30 percent of this inventory was still held within the consolidated entity at the end of 2017. In 2018, $180,000 in intra-entity sales were made with an original cost of $68,000. Of this merchandise, 40 percent had not been resold to outside parties by the end of the year.

Each of the following questions should be considered as an independent situation for the year 2018.

1. What is consolidated net income for Placid Lake and its subsidiary?

2. If the intra-entity sales were upstream, how would consolidated net income be allocated to the controlling and noncontrolling interest?

3. If the intra-entity sales were downstream, how would consolidated net income be allocated to the controlling and noncontrolling interest?

4. What is the consolidated balance in the ending Inventory account?

5. Assume that no intra-entity inventory sales occurred between Placid Lake and Scenic. Instead, in 2017, Scenic sold land costing $39,000 to Placid Lake for $68,000. On the 2018 consolidated balance sheet, what value should be reported for land?

1. f-1. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2017, Scenic sold equipment (that originally cost $190,000 but had a $69,000 book value on that date) to Placid Lake for $98,000. At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December 31, 2018, consolidation of these two companies to eliminate the impact of the intra-entity transfer?

2. f-2. For 2018, what is the noncontrolling interest’s share of Scenic’s net income?

Problem 16-6 Skysong Corporation is preparing the comparative financial statements for the annual report to its shareholders for fiscal years ended May 31, 2017, and May 31, 2018. The income from operations for the fiscal year ended May 31, 2017, was $1,775,000 and income from continuing operations for the fiscal year ended May 31, 2018, was $2,566,000. In both years, the company incurred a 10% interest expense on $2,446,000 of debt, an obligation that requires interest-only payments for 5 years. The company experienced a loss from discontinued operations of $617,000 on February 2018. The company uses a 40% effective tax rate for income taxes. The capital structure of Skysong Corporation on June 1, 2016, consisted of 954,000 shares of common stock outstanding and 20,100 shares of $50 par value, 5%, cumulative preferred stock. There were no preferred dividends in arrears, and the company had not issued any convertible securities, options, or warrants. On October 1, 2016, Skysong sold an additional 490,000 shares of the common stock at $20 per share. Skysong distributed a 20% stock dividend on the common shares outstanding on January 1, 2017. On December 1, 2017, Skysong was able to sell an additional 794,000 shares of the common stock at $22 per share. These were the only common stock transactions that occurred during the two fiscal years. Identify whether the capital structure at Skysong Corporation is a simple or complex capital structure. Determine the weighted-average number of shares that Skysong Corporation would use in calculating earnings per share for the fiscal year ended: Weighted-average number of shares (1) May 31, 2017 (2) May 31, 2018 Prepare, in good form, a comparative income statement, beginning with income from operations, for Skysong Corporation for the fiscal years ended May 31, 2017, and May 31, 2018. This statement will be included in Skysong’s annual report and should display the appropriate earnings per share presentations. (Round earnings per share to 2 decimal places, e.g. $1.55.) SKYSONG CORPORATION Comparative Income Statement For Fiscal Years Ended May 31, 2017 and 2018 2017 2018 $ $ $ $ Earnings per share: $ $ $ $ Question Attempts: 0 of 5 used Save for later Submit Answer

Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2017, when Scenic had a net book value of $450,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $8,000 per year.

Placid Lake's 2018 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $350,000. Scenic reported net income of $160,000. Placid Lake declared $150,000 in dividends during this period; Scenic paid $45,000. At the end of 2018, selected figures from the two companies' balance sheets were as follows:

During 2017, intra-entity sales of $100,000 (original cost of $52,000) were made. Only 20 percent of this inventory was still held within the consolidated entity at the end of 2017. In 2018, $140,000 in intra-entity sales were made with an original cost of $64,000. Of this merchandise, 30 percent had not been resold to outside parties by the end of the year.

Each of the following questions should be considered as an independent situation for the year 2018.

1. What is consolidated net income for Placid Lake and its subsidiary?

2. If the intra-entity sales were upstream, how would consolidated net income be allocated to the controlling and noncontrolling interest?

3. If the intra-entity sales were downstream, how would consolidated net income be allocated to the controlling and noncontrolling interest?

4. What is the consolidated balance in the ending Inventory account?

5. Assume that no intra-entity inventory sales occurred between Placid Lake and Scenic. Instead, in 2017, Scenic sold land costing $35,000 to Placid Lake for $60,000. On the 2018 consolidated balance sheet, what value should be reported for land?

1. f-1. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2017, Scenic sold equipment (that originally cost $150,000 but had a $65,000 book value on that date) to Placid Lake for $90,000. At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December 31, 2018, consolidation of these two companies to eliminate the impact of the intra-entity transfer?

2. f-2. For 2018, what is the noncontrolling interest’s share of Scenic’s net income?

Rob McGowan collects data from General Motors, General Electric, Oracle, and Microsoft. His professor seeks to form a portfolio using these stocks. ?

3. Compute the “beta” for each stock (Use DJIA as the market return).

a) What does beta measure?

Cherokee Company's auditor discovered some errors. No errors were corrected during 2017. The errors are described as follows: (1.) Beginning inventory on January 1, 2017, was understated by $5,000. (2.) A two-year insurance policy purchased on April 30, 2017, in the amount of $20,400 was debited to Prepaid Insurance. No adjustment was made on December 31, 2017, or on December 31, 2018. Required: Prepare appropriate journal entries (assume the 2018 books have not been closed). Ignore income taxes. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Beginning inventory on January 1, 2017, was understated by $5,000. A two-year insurance policy purchased on April 30, 2017, in the amount of $20,400 was debited to Prepaid Insurance. No adjustment was made on December 31, 2017, or on December 31, 2018.

1. Country of Fruitland can produce either apples or oranges.

Annual output and market prices of apples and oranges for the respective years are given in table below.

Let 2017 be the base year.

Suppose a representative consumer buys 10 apples and 20 oranges in a year.

1. Compute the RGDP & NGDP for 2019.

1. What is the GDP Deflator for 2018 & 2019?

1. Compute the inflation rate for 2019 (using the GDP Deflator).

1. What is the cost of CPI market basket in 2018 & 2019?

1. What is the CPI for 2019?

1. Compute the inflation rate for 2019 (using CPI).

1. Give a reason why inflation rate is different between subpart C and F, if it is different at all.

Question No. Four

X Limited Corporation making one product only, the standard cost of which is as follow:

- The fixed manufacturing overhead costs $300,000

- Fixed marketing costs $200,000

- The selling price $200 per unit sold

- The number of units produced and sold were:

Required

1. Prepare income statements under variable, absorption and throughput costing for the year ended December 31, 2018.
2. Explain the difference of the results?

1. ountry of Fruitland can produce either apples or oranges.

Annual output and market prices of apples and oranges for the respective years are given in table below.

Let 2017 be the base year.

Suppose a representative consumer buys 10 apples and 20 oranges in a year.

1. Compute the RGDP & NGDP for 2019.

1. What is the GDP Deflator for 2018 & 2019?

1. Compute the inflation rate for 2019 (using the GDP Deflator).

1. What is the cost of CPI market basket in 2018 & 2019?

1. What is the CPI for 2019?

1. Compute the inflation rate for 2019 (using CPI).

1. Give a reason why inflation rate is different between subpart C and F, if it is different at all.