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Chapter 10 Problems

Chapter 10 Problems - Chapter 10 Problems Problem 13...

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Chapter 10 Problems Problem 13 Unrealized profits After tax Closing inventory – Prince selling 40,000 – Albert selling 72,000 Equipment Jan. 1, Year 4 – Albert selling 120,000 Amount realized annually through depreciation (120,000 / 5 years) 24,000 1) Albert owns 64% of Prince (a subsidiary) Investment in Prince (64% × 860,000) 550,400 Intercompany investment income 550,400 Year 5 net income Dividends receivable (64% × 200,000) 128,000 Investment in Prince 128,000 Year 5 dividends declared but not received Intercompany investment income (64% × 40,000) 25,600 Investment in Prince 25,600 Unrealized closing inventory profit – Prince selling Intercompany investment income 72,000 Investment in Prince 72,000 Unrealized closing inventory profit – Albert selling Investment in Prince 24,000 Intercompany investment income 24,000 Equipment profit realized in Year 5 – Albert selling
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2) Albert owns 30% of Prince (a joint venture) Investment in Prince (30% × 860,000) 258,000 Intercompany investment income 258,000 Year 5 net income Dividends receivable (30% × 200,000) 60,000 Investment in Prince 60,000 Year 5 dividends declared but not received Intercompany investment income (30% × 40,000) 12,000 Investment in Prince 12,000 Unrealized closing inventory profit – Prince selling Intercompany investment income (30% × 72,000) 21,600 Investment in Prince 21,600 Unrealized closing inventory profit – Albert selling (Note: 70% is realized selling to the other venturers) Investment in Prince (30% × 24,000) 7,200 Intercompany investment income 7,200 Equipment profit realized in Year 5 – Albert selling (70% is realized selling to other venturers)
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Problem 14 Part A
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