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Practice_Prob_Final Exam

Practice_Prob_Final Exam - E7-1 Multiple-Choice Questions...

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E7-1 Multiple-Choice Questions on Intercompany Inventory Transfers [AICPA Adapted] 1. a 2. c 3. a 4. c 5. c Net assets reported $320,000 Profit on intercompany sale $48,000 Proportion of inventory unsold at year end ($60,000 / $240,000) x .25 Unrealized profit at year end (12,000 ) Amount reported in consolidated statements $308,000 6. c Inventory reported by Banks ($175,000 + $60,000) $235,000 Inventory reported by Lamm 250,000 Total inventory reported $485,000 Unrealized profit at year end [$50,000 x ($60,000 / $200,000)] (15,000 ) Amount reported in consolidated statements $470,000
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E7-2 Multiple-Choice Questions on the Effects of Inventory Transfers [AICPA Adapted] 1. b Cost of goods sold reported by Park $ 800,000 Cost of goods sold reported by Small 700,000 Total cost of goods sold reported $1,500,000 Cost of goods sold reported by Park on sale to Small ($500,000 x .40) (200,000) Reduction of cost of goods sold reported by Small for profit on intercompany sale [($500,000 x 4 / 5) x .60] (240,000 ) Cost of goods sold for consolidated entity $1,060,000 Note: Answer b in the actual CPA examination question was $1,100,000, requiring candidates to select the closest answer. 2. d $32,000 = ($200,000 + $140,000) – $308,000 3. b $6,000 = ($26,000 + $19,000) – $39,000 4. c $9,000 = Inventory held by Spin ($32,000 x .375) $12,000 Unrealized profit on sale [($30,000 + $25,000) – $52,000] (3,000 ) Carrying cost of inventory for Power $ 9,000 5. b .20 = $14,000 / [(Stockholders’ Equity $50,000) +(Patent $20,000)] 6. b 14 years = ($28,000 / [(28,000 - $20,000) / 4 years] E7-3 Multiple Choice – Consolidated Income Statement 1. c 2. b 3. c Total income ($86,000 - $47,000) $39,000 Income assigned to noncontrolling interest [.40($86,000 - $60,000)] (10,400 ) Consolidated net income assigned to controlling interest $28,600
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