Failure to eliminate intercompany sales would result in an overstatement of
cost of sales.
all of these.
Patek Company acquired an 80% interest in Sutton Company in 2007. In 2008 and
2009, Sutton reported net income of $300,000 and $360,000, respectively.
2008, Sutton sold $60,000 of merchandise to Patek for a $15,000 profit.
the merchandise to outsiders during 2009 for $105,000.
For consolidation purposes,
what is the noncontrolling interest’s share of Sutton's 2008 and 2009 net income?
$57,000 and $75,000.
$60,000 and $72,000.
$75,000 and $57,000.
$63,000 and $69,000.
Pratt Company owns 80% of Sage Corporation.
On January 1, 2008 Pratt sold
equipment to Sage at a gain.
Sage is using an eight-year straight-line rate with no
In the consolidated income statement, Sage’s recorded depreciation
expense on the equipment for 2008 will be reduced by
10.0 % of the gain on sale.
12.5 % of the gain on sale.
80.0 % of the gain on sale.
% of the gain on sale.
Lorikeet Corporation acquired an 80% interest in Nectar Corporation on January 1,
2000 at a cost equal to book value and fair value.
In the same year Nectar sold land
costing $50,000 to Lorikeet for $30,000.
On July 1, 2005, Lorikeet sold the land to an
unrelated party for $110,000.
What will be the gain reported on the consolidated
income statement for 2005?