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.

1) On January 1, 2018, AAA Co. granted 1,000 employee stock options with an exercise price of $5 per share. On January 1, 2018, AAA Co.’s stock had a market price of $5 per share and the options had an estimated value from an options pricing model of $2.50 each. The options vest on December 31, 2019. AAA expects an 80% vesting rate. a. What compensation expense is recorded in 2018 for the above stock option plan? What journal entry will AAA make? b. On December 31, 2019, AAA observes that 850 options actually vest. What compensation expense is recorded in 2019 for the above stock option plan? c. What journal entry will AAA make on June 30, 2020 when 500 of the options are exercised and the market price of the shares is $12?

The December 31, 2018, year-end inventory balance of the Raymond Corporation is $234,000. You have been asked to review the following transactions to determine if they have been correctly recorded.

Goods shipped to Raymond f.o.b. destination on December 26, 2018, were received on January 2, 2019. The invoice cost of $42,000 is included in the preliminary inventory balance.

At year-end, Raymond held $26,000 of merchandise on consignment from the Harrison Company. This merchandise is included in the preliminary inventory balance.

On December 29, merchandise costing $7,200 was shipped to a customer f.o.b. shipping point and arrived at the customer’s location on January 3, 2019. The merchandise is not included in the preliminary inventory balance.

At year-end, Raymond had merchandise costing $27,000 on consignment with the Joclyn Corporation. The merchandise is notincluded in the preliminary inventory balance.

Required:
Determine the correct inventory amount to be reported in Raymond’s 2018 balance sheet.

Hasher Company obtained a cool mine in January 2018, incurring cost of land 12,000,000, legal costs of $30,000, registration fees 70,000, building for the employees 250,000, heavy drilling machines 5,000,000 and trucks 1,000,000. The company estimated 5,500,000 TONS in the mine during 10 years operation. The land will cost 2,500,000 to restated at the ending of the project ( the implicit rate 6%) , and expected to sold the land at the end of extractions$ 1,100,000, all other noncurrent assets will have used through the extractions period without any expected salvage value and used the units of activities to allocate their costs. During 2018 the company extracted 700,000 tons and sold 500,000 for $10 each but in 2019 the company extracted 800,000 tons and sold 1,000,000tons for 12$. Required Prepare the necessary journal entries for the years ending December 31/2018, and 2019. Show all computations.