Consolidation Worksheet: Upstream Transfers — 90% Ownership In 2005, Pino Inc. created a 90%-owned subsidiary, Sino Inc. In 2006, intercompany inventory transfers occurred for the first time. Comparative financial statements are as follows:

Income Statement (2006)

Sales Cost Expenses of

.

sales

.

.

Intercompany Accounts Equity in net income (of Sino) .

Intercompany Intercompany sales cost of

.

sales .

Net Income .

Balance Sheet (as of 12/31/06)

Inventory:

Investment Other Intercompany from assets vendors in

.

subsidiary

.

.

.

Total Assets .

Common Liabilities Retained Total stock earnings Liabilities

.

.

.

and Equity .

Pino Inc. Sino Inc.

$ 630,000 (475,000) $ (25,000) 90,000

(95,000) (45,000)

63,000 250,000

(200,000)

$ 123,000

$ 70,000

$ 65,000 50,000 $ 90,000 198,000 487,000 310,000

$ 800,000 $ 400,000

$ 255,000 $ 180,000 300,000 120,000 245,000 100,000

$ 800,000 $ 400,000

$ 80,000 $ 30,000 1. Determine the unrealized profit at year-end by preparing an analysis. {For Module 1 only; Also make the necessary year-end general ledger adjusting entry(ies) [for unrealized profit] required for this module. Adjust both sets of statements accordingly.)
2. Prepare all consolidation entries as of 12/31/06.
3. Prepare a consolidation worksheet at 12/31/06.