Chapter_5_day_2_solutions

Chapter_5_day_2_solutions - 18. (40 Minutes) (Series of...

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Unformatted text preview: 18. (40 Minutes) (Series of independent questions concerning various aspects of the consolidation process when intercompany transfers have occurred) a. 2009 Unrealized gross profit to be recognized in 2010 Total interco. gross profit on transfers ($90,000 $54,000) . . $36,000 Inventory retained at end of 2009 ............................................. 20% Unrealized gross profit12/31/09 ............................$7,200 2010 Unrealized Gross profit Deferred Total interco. gross profit on transfers ($120,000 $66,000) $54,000 Inventory retained at end of 2010 ............................................. 30% Unrealized gross profit12/31/10.............................$16,200 18. a. (continued) Noncontrolling Interest's Share of Kane's Income Kane's reported income 2010..........................................$110,000 Amortization of excess fair value to intangibles...........(5,000) 2009 gross profit realized in 2010 (upstream sales) ..... 7,200 2010 gross profit deferred (upstream sales) ................(16,200 ) Kane's realized income ...................................................$96,000 Noncontrolling interest ownership ........................................... 20% Noncontrolling Interest's Share of Kane's Income....... $19,200 b. InventorySmith book value .........................................$140,000 InventoryKane book value ..........................................90,000 Unrealized gross profit, 12/31/10 (see part a) ...............(16,200 ) Consolidated Inventory ...................................................$213,800 (Direction of transfer has no impact here) c. Downstream transfers do not affect the noncontrolling interest. Kane's reported income2010 .....................................$110,000 Noncontrolling interest ownership .......................................... 20% Noncontrolling Interest's Share of Kane's Income .......$22,000 d. Smith's reported income 2010.........................................$300,000 Elimination of intercompany dividend income recorded by parent ($40,000 80%) .........................................(32,000) Kane's reported income 2010 .........................................110,000 Amortization expense (given) .......................................(5,000) Realization of 2009 intercompany gross profit (see part a) .. 7,200 Deferral of 2010 intercompany gross profit (see part a) ........(16,200 ) Consolidated net income .................................................$364,000....
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Chapter_5_day_2_solutions - 18. (40 Minutes) (Series of...

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