Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

18) Pastern Industries has an 80% ownership stake in Sascon Incorporated. At the time of purchase, the book value of Sascon's assets and liabilities were

18) Pastern Industries has an 80% ownership stake in Sascon Incorporated. At the time of purchase, the book value of Sascon's assets and liabilities were equal to the fair value. The cost of the 80% investment was equal to 80% of the book value of Sascon's net assets. At the end of 2011, they issued the following consolidated income statement:

Sales$930,000

Cost of sales(470,000)

Operating expenses(202,000)

Noncontrolling interest share(23,000)

Controlling interest share$235,000

Shortly after the statements were issued, Pastern discovered that the 2011 intercompany sales transactions had not been properly eliminated in consolidation. In fact, Pastern had sold inventory that cost $80,000 to Sascon for $90,000, and Sascon had sold inventory that cost $50,000 to Pastern for $65,000. Half of the products from both transactions still remained in inventory at December 31, 2011.

Required: Prepare a corrected income statement for Pastern and Subsidiary for 2011.

Step by Step Solution

3.33 Rating (150 Votes )

There are 3 Steps involved in it

Step: 1

To prepare a corrected income statement for Pastern and its subsidiary Sascon for 2011 we need to ad... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Financial Accounting

Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker

10th edition

78025621, 978-0078025624

More Books

Students also viewed these Accounting questions

Question

Summarize the impact of stress on physical well-being.

Answered: 1 week ago