Exam 5: Consolidated Financial Statements Intra-Entity Asset Transactions

What amount should be recorded on Wilson's books as gain on the transfer of equipment, prior to preparing consolidating entries?

On January 1, 2018, Payton Co.sold equipment to its subsidiary, Starker Corp., for $115,000.The equipment had cost $125,000, and the balance in accumulated depreciation was $45,000.The equipment had an estimated remaining useful life of eight years and $0 salvage value.Both companies use straight-line depreciation.On their separate 2018 income statements, Payton and Starker reported depreciation expense of $84,000 and $60,000, respectively.The amount of depreciation expense on the consolidated income statement for 2018 would have been:

On a consolidation worksheet, what adjustment would be made for 2017 regarding the land transfer?

Assuming there are no excess amortizations associated with the consolidation, and no other intra-entity asset transfers, compute the net income attributable to the noncontrolling interest of Gargiulo for 2017.

Gibson Corp.owned a 90% interest in Sparis Co.Sparis frequently made sales of inventory to Gibson.The sales, which include a markup over cost of 25%, were $420,000 in 2017 and $500,000 in 2018.At the end of each year, Gibson still owned 30% of the goods.Net income for Sparis was $912,000 during 2018.Assuming there are no excess amortizations associated with the consolidation, and no other intra-entity asset transfers, what was the net income attributable to the noncontrolling interest for 2018?

Prepare any 2018 consolidation worksheet entries that would be required regarding the 2017 inventory transfer.

An intra-entity transfer took place whereby the book value exceeded the transfer price of a depreciable asset.Which statement is true for the year after the year of transfer?

Assuming there are no excess amortizations or other intra-entity transactions, compute income from Stiller on Leo's books for 2018.

King Corp.owns 85% of James Co.King uses the equity method to account for its investments.During 2018, King sells inventory to James for $500,000.The inventory originally cost King $420,000.At 12/31/2018, 25% of the goods were still in James' inventory. Required: Prepare the Consolidation Entry TI and Consolidation Entry G for the consolidation worksheet.

On April 7, 2018, Pate Corp.sold land to Shannahan Co., its subsidiary.From a consolidated financial statement point of view, when will the gain on this transfer actually be recognized?

Yoderly Co., a wholly owned subsidiary of Nelson Corp., sold goods to Nelson near the end of 2018.The goods had cost Yoderly $105,000 and the selling price was $140,000.Nelson had not sold any of the goods by the end of the year. Required: Prepare Consolidation Entry TI and Consolidation Entry G that are required for 2018.

Assuming there are no excess amortizations or other intra-entity transactions, compute income from Stark reported on Parker's books for 2017.

How do upstream and downstream inventory transfers differ in their effect in a year-end consolidation?

Compute the amortization of gain through a depreciation adjustment for 2018 for consolidation purposes.

How does a gain on an intra-entity transfer of equipment affect the calculation of a noncontrolling interest?

Prepare a schedule of consolidated net income and the share to controlling and noncontrolling interests for 2018, assuming that Musial owned only 90% of Matin and the equipment transfer had been upstream

Assuming there are no excess amortizations or other intra-entity transactions, compute income from Stiller on Leo's books for 2017.

Assume that Icecap sold inventory to Polar at a markup equal to 25% of cost.Intra-entity transfers were $70,000 in 2017 and $112,000 in 2018.Of this inventory, $29,000 of the 2017 transfers were retained and then sold by Polar in 2018, whereas $49,000 of the 2018 transfers was held until 2019. Required: For the consolidated financial statements for 2018, determine the balances that would appear for the following accounts: (i) Cost of Goods Sold; (ii) Inventory; and (iii) Net income attributable to the noncontrolling interest.

What is the impact on the noncontrolling interest of a subsidiary when there are downstream transfers of inventory between the parent and subsidiary companies?

Prepare the consolidation entries that should be made at the end of 2017.