Question 1

Assuming there are no excess amortizations or other intra-entity transactions, Compute the income from Devin reported on Pepe's books for 2018.

Accepted Answer

A)  $190,200. 
B)  $196,000. 
C)  $194,400. 
D)  $187,000. 
E)  $195,000.

Question 2

Webb Co.acquired 100% of Rand Inc.on January 5, 2018.During 2018, Webb sold goods to Rand for $2,400,000 that cost Webb $1,800,000.Rand still owned 40% of the goods at the end of the year.Cost of goods sold was $10,800,000 for Webb and $6,400,000 for Rand.What was consolidated cost of goods sold?

Accepted Answer

A)  $17,200,000. 
B)  $15,040,000. 
C)  $14,800,000. 
D)  $15,400,000. 
E)  $14,560,000.

Question 3

In the consolidation worksheet for 2018, assuming Carter uses the initial value method of accounting for its investment in Strickland, which of the following accounts would be debited to defer unrecognized intra-entity gross profit with regard to the 2017 intra-entity transfers?

Accepted Answer

A)  Retained earnings. 
B)  Cost of goods sold. 
C)  Inventory. 
D)  Investment in Strickland Company. 
E)  Sales.

Question 4

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 2019.

Accepted Answer

A)  $9,400. 
B)  $9,375. 
C)  $9,425. 
D)  $9,325. 
E)  $8,485.

Question 5

On November 8, 2018, Power Corp.sold land to Wood Co., its wholly owned subsidiary.The land cost $61,500 and was sold to Wood for $89,000.For consolidated financial statement reporting purposes, when must the gain on the sale of the land be recognized?

Accepted Answer

A)  Proportionately over a designated period of years. 
B)  When Wood Co. sells the land to a third party. 
C)  No gain may be recognized. 
D)  As Wood uses the land. 
E)  When Wood Co. begins using the land productively.

Question 6

At what amount should the equipment (net of depreciation) be included in the consolidated balance sheet dated December 31, 2017?

Accepted Answer

A)  $105,000. 
B)  $100,000. 
C)  $ 95,000. 
D)  $ 80,000. 
E)  $ 85,000.

Question 7

In the consolidation worksheet for 2017, which of the following accounts would be credited to eliminate the intra-entity transfer of inventory?

Accepted Answer

A)  Retained earnings. 
B)  Cost of goods sold. 
C)  Inventory. 
D)  Investment in Fisher Company. 
E)  Sales.

Question 8

Assuming there are no excess amortizations or other intra-entity transactions, compute the net income attributable to the noncontrolling interest of Devin for 2018.

Accepted Answer

A)  $126,800. 
B)  $130,000. 
C)  $122,000. 
D)  $130,800. 
E)  $129,600.

Question 9

Assume that Polar sold inventory to Icecap at a markup equal to 25% of cost.Intra-entity transfers were $130,000 in 2017 and $165,000 in 2018.Of this inventory, $39,000 of the 2017 transfers were retained and then sold by Icecap in 2018, while $55,000 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.

Accepted Answer

The answer of Assume that Polar sold inventory to Icecap...

Question 10

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

Accepted Answer

A)  $185,000. 
B)  $157,500. 
C)  $166,500. 
D)  $162,000. 
E)  $180,000.

Question 11

Assuming there are no excess amortizations or other intra-entity transactions, Compute the income from Devin reported on Pepe's books for 2017.

Accepted Answer

A)  $174,600. 
B)  $184,800. 
C)  $172,000. 
D)  $171,000. 
E)  $180,000.

Question 12

In the consolidation worksheet for 2017, which of the following accounts would be credited to eliminate the intra-entity transfer of inventory?

Accepted Answer

A)  Retained earnings. 
B)  Cost of goods sold. 
C)  Inventory. 
D)  Investment in Strickland Company. 
E)  Sales.

Question 13

What is the gain or loss on equipment recognized by Devin on its internal accounting records for 2017?

Accepted Answer

A)  $54,000 gain. 
B)  $21,000 loss. 
C)  $21,000 gain. 
D)  $ 9,000 loss. 
E)  $ 9,000 gain.

Question 14

What is an intra-entity gross profit on a transfer of inventory, and how is it treated on a consolidation worksheet?

Accepted Answer

The answer of What is an intra-entity gross profit on...

Question 15

Justings Co.owned 80% of Evana Corp.During 2018, Justings sold to Evana land with a book value of $48,000.The selling price was $70,000.For purposes of the December 31, 2018 consolidated financial statements, at what amount should the land be reported?

Accepted Answer

A)  $17,600. 
B)  $22,000. 
C)  $48,000. 
D)  $56,000. 
E)  $70,000.

Question 16

Included in the amounts for Pot's sales were Pot's sales of merchandise to Skillet for $140,000.There were no intra-entity transfers from Skillet to Pot.Intra-entity transfers had the same markup as sales to outsiders.Skillet still held 40% of the intra-entity gross profit remaining in ending inventory at the end of 2018.What are consolidated sales and cost of goods sold, respectively for 2018?

Accepted Answer

A)  $1,400,000 and $ 952,000. 
B)  $1,400,000 and $ 966,000. 
C)  $1,540,000 and $1,078,000. 
D)  $1,400,000 and $1,022,000. 
E)  $1,540,000 and $1,092,000.

Question 17

Tara Company owns 80 percent of the common stock of Stodd Inc.In the current year, Tara reports sales of $5,000,000 and cost of goods sold of $3,500,000.For the same period, Stodd has sales of $500,000 and cost of goods sold of $400,000.During the year, Stodd sold merchandise to Tara for $40,000 at a price based on the normal markup.At the end of the year, Tara still possesses 20 percent of this inventory.Prepare the consolidation entry to defer intra-entity gross profit.

Accepted Answer

The answer of Tara Company owns 80 percent of the...

Question 18

An intra-entity transfer took place whereby the transfer price was less than the book value of a depreciable asset.Which statement is true for the year subsequent to the year of transfer?

Accepted Answer

A)  A worksheet entry is made with a debit to investment in subsidiary for an upstream transfer. 
B)  A worksheet entry is made with a debit to investment in subsidiary for a downstream transfer. 
C)  A worksheet entry is made with a credit to investment in subsidiary for a downstream transfer when the parent uses the equity method. 
D)  A worksheet entry is made with a debit to retained earnings for an upstream transfer, regardless of the method used to account for the investment. 
E)  No worksheet entry is necessary.

Question 19

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 2018.

Accepted Answer

A)  $8,500. 
B)  $8,570. 
C)  $8,430. 
D)  $8,400. 
E)  $7,580.

Question 20

What is consolidated net income for 2018?

Accepted Answer

The answer of What is consolidated net income for 2018?...

Exam 5: Consolidated Financial Statements Intra-Entity Asset Transactions

Assuming there are no excess amortizations or other intra-entity transactions, Compute the income from Devin reported on Pepe's books for 2018.

Webb Co.acquired 100% of Rand Inc.on January 5, 2018.During 2018, Webb sold goods to Rand for $2,400,000 that cost Webb $1,800,000.Rand still owned 40% of the goods at the end of the year.Cost of goods sold was $10,800,000 for Webb and $6,400,000 for Rand.What was consolidated cost of goods sold?

In the consolidation worksheet for 2018, assuming Carter uses the initial value method of accounting for its investment in Strickland, which of the following accounts would be debited to defer unrecognized intra-entity gross profit with regard to the 2017 intra-entity transfers?

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 2019.

On November 8, 2018, Power Corp.sold land to Wood Co., its wholly owned subsidiary.The land cost $61,500 and was sold to Wood for $89,000.For consolidated financial statement reporting purposes, when must the gain on the sale of the land be recognized?

At what amount should the equipment (net of depreciation) be included in the consolidated balance sheet dated December 31, 2017?

In the consolidation worksheet for 2017, which of the following accounts would be credited to eliminate the intra-entity transfer of inventory?

Assuming there are no excess amortizations or other intra-entity transactions, compute the net income attributable to the noncontrolling interest of Devin for 2018.

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

Assuming there are no excess amortizations or other intra-entity transactions, Compute the income from Devin reported on Pepe's books for 2017.

In the consolidation worksheet for 2017, which of the following accounts would be credited to eliminate the intra-entity transfer of inventory?

What is the gain or loss on equipment recognized by Devin on its internal accounting records for 2017?

What is an intra-entity gross profit on a transfer of inventory, and how is it treated on a consolidation worksheet?

Justings Co.owned 80% of Evana Corp.During 2018, Justings sold to Evana land with a book value of $48,000.The selling price was $70,000.For purposes of the December 31, 2018 consolidated financial statements, at what amount should the land be reported?

An intra-entity transfer took place whereby the transfer price was less than the book value of a depreciable asset.Which statement is true for the year subsequent to the year of 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 2018.

What is consolidated net income for 2018?