comparative staten subsid were prepared incorrectly as at December 31 and are shown in the table given below. The following items were overlooked when the statements were prepared: The Year 5 gain on sale of assets resulted from the subsidiary selling equipment to the parent on September 30. The parent immediately leased the equipment back to the subsidiary at an annual rental of $25,200. This was the only intercompany rent transaction that occurred each year. The equipment had a remaining life of five years on the date of the intercompany sale. The Year 6 gain on sale of assets resulted from the January 1 sale of a building, with a remaining life of seven years, by the subsidiary to the parent. Both gains were taxed at a rate of 40%. CONSOLIDATED INCOME STATEMENTS Year 5 Year 6 Miscellaneous revenues $ 805,000 $ 880,000 Gain on sale of assets 16.800 49.700

comparative staten subsid were prepared incorrectly as at December 31 and are shown in the table given below. The following items were overlooked when the statements were prepared: The Year 5 gain on sale of assets resulted from the subsidiary selling equipment to the parent on September 30. The parent immediately leased the equipment back to the subsidiary at an annual rental of $25,200. This was the only intercompany rent transaction that occurred each year. The equipment had a remaining life of five years on the date of the intercompany sale. The Year 6 gain on sale of assets resulted from the January 1 sale of a building, with a remaining life of seven years, by the subsidiary to the parent. Both gains were taxed at a rate of 40%. CONSOLIDATED INCOME STATEMENTS Year 5 Year 6 Miscellaneous revenues $ 805,000 $ 880,000 Gain on sale of assets 16.800 49.700

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On July 1, Zamora Inc. agreed to sell the assets of its Golfright Division to Benito Inc. for $71 million. The following additional facts pertain to the transaction: • The Golfrignt Division qualifies as a component of the entity according to GAAP regarding discontinued operations. • The book value of the Golfright's assets totaled $45 million on the date of the sale. Golfright's operating income was a pre-tax loss of $160 million in 2020. • Zamora's income tax rate is 40%. Suppose that the Golfright Division's assets had not been sold by December 31, 2020, but were considered held for sale. Assume that the fair value of these assets at December 31 was $71 million. Calculate the amount of loss from discontinued operations Zamora Inc. will report in the income statement for 2020. (Please input answer without the millions, i.e. 100 million would be entered as 100)
Dave Company sold inventory to Raine Company, its 90%-ownedsubsidiary. The sale is on account and remain outstanding as of thereporting period. How should the intercompany receivable and payable bepresented in the consolidated statements? a. Dave Company should present only 90% of the receivable in theconsolidated statement of financial position.b. The receivable in the book of Dave and payable in the book of Rainewill be forwarded in full in the consolidated statement of financial position.c. The receivable in the book of Dave will be forwarded in full and payablein the book of Raine will be prorated only to 90% in the consolidatedstatement of financial position.d. Both receivable and payable will be eliminated in full.
On 5 June 2022, a parent entity sold inventories to a subsidiary entity for $80. The inventories had previously cost the parent entity $72. All the inventories are still held by the subsidiary at reporting date, 30 June 2022. Ignoring tax effects, the adjustment entry in the consolidation worksheet at reporting date is: a. Sales revenue O b. O C. Cost of sales Inventories Cash Sales revenue Cost of sales Inventories Sales revenue Cost of sales Inventories d. Sales revenue Cash Inventories Cost of sales Dr Ä ÄÄ Ä ÄJÄJ Cr Cr Dr Cr Dr Cr Dr Cr Cr Dr Cr Dr Cr 80 000 72 000 72 000 80 000 72 000 72 000 8 000 72 000 72 000 72 000 72 000 8 000 72 000 72 000
(a) Jessica Ltd sold inventory during the current period to its wholly-owned subsidiary, Amelie Ltd, for $15 000. These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for $8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriate consolidation adjustment entries are as follows:Required(i) Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basis the correct adjustment entry.
During the year ended 30 June 2021, a parent entity rents a warehouse from a subsidiary entity for $200 000. The company tax rate is 30%. Which of the following is the consolidation adjustment entry needed at reporting date to eliminate the transaction? a. Rent revenue Dr 200 000 Rent expense Cr 200 000 b. Rent revenue Dr 200 000 Rent expense Cr 200 000 Income tax expense Dr 60 000 Deferred tax liability Cr 60 000 c. Rent revenue Dr 200 000 Rent expense Cr 200 000 Deferred tax asset Dr 60 000 Income tax expense Cr 60 000 d. Rent expense Dr 200 000 Rent revenue Cr 200 000
H has a 75% owned subsidiary S. During the year ending 31 December 2021 H sold inventory to S for an invoice price of £800,000. S have since sold 75% of that inventory to third parties. The sale was at a mark-up of 25%on cost to H. S is the only subsidiary of H. What is the adjustment to inventory that would be included in the consolidated statement of financial position of H at the year-ending 31 December 2021 resulting from this sale? Show you calculations.
During the year ended 30 June 2021, a parent entity rents a warehouse from a subsidiary entity for $200 000. The company tax rate is 30%. Which of the following is the consolidation adjustment entry needed at reporting date to eliminate the transaction? a. Rent revenue Dr 200 000 Rent expense Cr 200 000 b. Rent revenue Dr 200 000 Rent expense Cr 200 000 Income tax expense Dr 60 000 Deferred tax liability Cr 60 000 c. Rent revenue Dr 200 000 Rent expense Cr 200 000 Deferred tax asset Dr 60 000 Income tax expense Cr 60 000 d. Rent expense Dr 200 000 Rent revenue Cr 200 000 Answer (write your correct choice):
In a prior year, a wholly-owned subsidiary sold land costing $100,000 to its parent for $125,000. In the current year, the parent sold the land to an outside company for $170,000. On a working paper prepared to consolidate the accounts of the parent and its subsidiary at the end of the current year, the eliminating entry connected with this land sale includes Select one: a. a $25,000 debit to the investment in subsidiary account b. a $45,000 debit to beginning retained earnings c. a $25,000 credit to gain on sale of land Od. no entry; the land is no longer in the consolidated entity O O
Kent Ltd owns all of the shares of Lodh Ltd. In relation to the following intragrouptransactions, all parts of which are independent unless specified, prepare theconsolidation worksheet adjusting entries for preparation of the consolidated financialstatements as at 30 June 2020. Assume an income tax rate of 30%. a. On 1 January 2020, Kent Ltd sold inventory costing $10,000 to Lodh Ltd at a transfer (sale) price $16,000. Lodh Ltd sold half of this inventory to an external party for $10,000 (i.e., half of the inventory is remained with Lodh Ltd at the end of the year). b. During March 2018, Lodh Ltd paid a $5,500 interim dividend. c. Kent Ltd rented a spare warehouse to Lodh Ltd. The total charge for the rental was $6,000. Lodh Ltd paid the whole amount to Kent Ltd during the year. d. On 1 July 2019, Kent…
P acquired 70% of S in 20X8. The statements of profit or loss of the two companies for the year ended 31 December 20X9 showed revenues: P $100000 S $70000 During November 20X9, S sold goods to P for $8000. None of these items remained in inventory at the end of year. What is the consolidated revenue for P for the year ended 31 December 20X9?
essica Ltd sold inventory during the current period to its wholly owned subsidiary, Amelie Ltd, for $15 000. These items previously cost Jessica Ltd $12 000. Amelie Ltd subsequently sold half the items to Ningbo Ltd for $8000. The tax rate is 30%. The group accountant for Jessica Ltd, Li Chen, maintains that the appropriate consolidation adjustment entries are as follows: Required (i) Discuss whether the entries suggested by Li Chen are correct, explaining on a line-by-line basis the correct adjustment entry. (ii)Determine the consolidation worksheet entries in the following year, assuming the inventory has been –sold, and explain the adjustments on a line-by-line basis. (b) On 1 July 2016 Liala Ltd sold an item of plant to Jordan Ltd for $450000 when its’ carrying value in Liala Ltd book was $600000 (costs $900000, accumulated depreciation $300000). This plant has a remaining useful life of five (5) years form the date of sale. The group measures its property plants and equipment…
In May 2020, a parent sold inventories to a subsidiary entity for $60 000. The inventories had previously cost the parent entity $48 000. The entire inventory is still held by the subsidiary at reporting date, 30 June 2020. Ignoring tax effects, which of the following is the adjustment entry in the consolidation worksheet at reporting date? a. Cash Dr 48 000 Sales revenue Cr 48 000 Cost of sales Dr 48 000 Inventories Cr 48 000 b. Sales revenue Dr 48 000 Cash Cr 48 000 Inventories Dr 48 000 Cost of sales Cr 48 000 c. Cost of sales Dr 60 000 Sales revenue Cr 12 000 Inventories Cr 48 000 d. Sales revenue Dr 60 000 Cost of sales Cr 48 000 Inventories Cr 12 000 Answer (write…