Midterm questions.doc

Midterm questions.doc - (a) Total annual excess fair value...

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(a) Total annual excess fair value amortization expense = $15,000 (c) Goodwill = $90,000 Noncontrolling Interest in Subsidiary, 12/31/11 = $75,000 Consolidated Retained earnings = $1,658,000 Consolidated total assets = $3,321,000 4. When companies sell inventory to each other, there’s usually a profit. The person that sells the inventory records a gross profit on their books, but since it’s and intercompany exchange, the gain isn’t realized until it’s sold to a third party. Because they can’t realize the gain, it must be eliminated when the consolidated worksheet is prepared. The year the inventory is sold, the unrealized gross profit is removed from the Inventory Account and the Cost of Goods Sold. In the year following the transfer (if the goods are resold or consumed), the unrealized gross profit must again be eliminated within the consolidation process. This second reduction is made on the worksheet to the beginning inventory component of cost of goods sold as well as to the beginning retained earnings balance of the original seller. The gross profit
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This note was uploaded on 04/05/2010 for the course ACCY 260 taught by Professor Yu during the Spring '10 term at Ferrum.

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Midterm questions.doc - (a) Total annual excess fair value...

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