AutoSave OF AAGO... Assignment 4 chpts 6 7A - Saved to my Mac Home - Insert Draw Design Layout References Mailings Review View Tell me Share Comments Verdana V 11 X A Aalbonate "A B! Uv * * BI Pastc Normal Y Dictate Sensitivity Editor Y Dacument Cloud Show Teskpane A vev 21 AaB+CcDdE: AabhCode A AA Harly That List Pargah Styles Pane Question - Chapter 6 and 7A: Consolidations (25 marks) On January 1, 2021 P Co acquired 60% ownership of S Ltd. On the acquisition date all identifiable assets and liabilities had book values equal to fair values. P uses the cost method to record its investment in S. For external reporting purposes consolidated statements are required. However, the purchase did result in the acquisition of goodwill of $55,000. During the past few years, a number of transactions have taken place: 1) Inter-company downstream sales during 2025 were 200,000. An unrealized profit of 18,000 still remains in the unsold ending inventory. The beginning inventory included an unrealized profit of 9,000 related to last year's downstream inter-company sales. 2) Inter-company upstream sales during 2025 were 70,000. An unrealized profit of 8,000 remains in the unsold ending inventory. There were no inter-company upstream sales last year. 3) On January 3, 2023, P sold equipment to S for 100,000. The equipment had a net book value of $75,000 and a remaining useful life of 10 years on the date of sale. 4) On July 8, 2025, S sold land to P for $167,000. The land had a book value of $155,000. The land remained within the consolidated entity for the entire 2025 year. 5) Goodwill impairment for 2025 was 5,500. 6) The following financial information is available for the year ending Dec 31, 2025: Net Income Dividends Paid P 125000 25,000 S 62,000 10,000 Required 1. Prepare an intercompany profit analysis schedule 2025 to show before tax, tax and after-tax impacts of intercompany inventory, land and equipment sales. Both companies use a 40% tax rate. (10 marks) Page 1 of 2 364 words English (Canada) Focus EL + 130% AutoSave OF AAGO... Assignment 4 chpts 6 7A - Saved to my Mac Home - Share Comments Insert Draw Design Layout References Mailings Review View Tell me X Verdana V 11 "A A EVEVI 21 A B! Uv * * BI AA AaRCoDate AaB+CcDdE: AabhCode Handy That List Pargah Pastc Nummi Dictate Styles Pane Sensitivity Editor Dacument Cloud Show Teskpane 2. Use your schedule in part 1 above to calculate consolidated net income for 2025. Show attribution to both shareholder groups. (8 marks) 3. Assume the following account balances for each company for 2025: S's Balance 25,000 Account P's Balance Depreciation 30,000 Expense Income Tax 24,0DO Expense Cost of Goods Sold 320,000 8,000 312,000 Find consolidated balances for each of the above accounts for the year ended 2025. Show your calculations using the direct method. (7 marks) TIP - feel free to make the worksheet entries to help you with your calculations Page 1 of 2 364 words English (Canada) Focus EL + 130% AutoSave OF AAGO... Assignment 4 chpts 6 7A - Saved to my Mac Home - Insert Draw Design Layout References Mailings Review View Tell me Share Comments Verdana V 11 X A Aalbonate "A B! Uv * * BI Pastc Normal Y Dictate Sensitivity Editor Y Dacument Cloud Show Teskpane A vev 21 AaB+CcDdE: AabhCode A AA Harly That List Pargah Styles Pane Question - Chapter 6 and 7A: Consolidations (25 marks) On January 1, 2021 P Co acquired 60% ownership of S Ltd. On the acquisition date all identifiable assets and liabilities had book values equal to fair values. P uses the cost method to record its investment in S. For external reporting purposes consolidated statements are required. However, the purchase did result in the acquisition of goodwill of $55,000. During the past few years, a number of transactions have taken place: 1) Inter-company downstream sales during 2025 were 200,000. An unrealized profit of 18,000 still remains in the unsold ending inventory. The beginning inventory included an unrealized profit of 9,000 related to last year's downstream inter-company sales. 2) Inter-company upstream sales during 2025 were 70,000. An unrealized profit of 8,000 remains in the unsold ending inventory. There were no inter-company upstream sales last year. 3) On January 3, 2023, P sold equipment to S for 100,000. The equipment had a net book value of $75,000 and a remaining useful life of 10 years on the date of sale. 4) On July 8, 2025, S sold land to P for $167,000. The land had a book value of $155,000. The land remained within the consolidated entity for the entire 2025 year. 5) Goodwill impairment for 2025 was 5,500. 6) The following financial information is available for the year ending Dec 31, 2025: Net Income Dividends Paid P 125000 25,000 S 62,000 10,000 Required 1. Prepare an intercompany profit analysis schedule 2025 to show before tax, tax and after-tax impacts of intercompany inventory, land and equipment sales. Both companies use a 40% tax rate. (10 marks) Page 1 of 2 364 words English (Canada) Focus EL + 130% AutoSave OF AAGO... Assignment 4 chpts 6 7A - Saved to my Mac Home - Share Comments Insert Draw Design Layout References Mailings Review View Tell me X Verdana V 11 "A A EVEVI 21 A B! Uv * * BI AA AaRCoDate AaB+CcDdE: AabhCode Handy That List Pargah Pastc Nummi Dictate Styles Pane Sensitivity Editor Dacument Cloud Show Teskpane 2. Use your schedule in part 1 above to calculate consolidated net income for 2025. Show attribution to both shareholder groups. (8 marks) 3. Assume the following account balances for each company for 2025: S's Balance 25,000 Account P's Balance Depreciation 30,000 Expense Income Tax 24,0DO Expense Cost of Goods Sold 320,000 8,000 312,000 Find consolidated balances for each of the above accounts for the year ended 2025. Show your calculations using the direct method. (7 marks) TIP - feel free to make the worksheet entries to help you with your calculations Page 1 of 2 364 words English (Canada) Focus EL + 130%