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Gryffindor Company acquired 80% of Hufflepuff Company on January 2, 2019. The difference between the implied and book value of net assets of Hufflepuff on

Gryffindor Company acquired 80% of Hufflepuff Company on January 2, 2019. The difference between the implied and book value of net assets of Hufflepuff on the date of acquisition were as follows:

Land: 50,000

Equipment (10 years life): 60,000

Inventory: 40,000

Hufflepuff reported retained earnings of 260,000 on January 1, 2022, and 320,000 on December 31, 2022.

Hufflepuff reported net income of 90,000, and declared dividends of 30,000 in 2022. Also, Gryffindor reported net income using the cost method in 2022 and paid dividends of 25,000. The retained earnings of Gryffindor on December 31, 2022 is 2,700,000. The sales and cost of sales together with the intercompany sales made during 2022 are as follows:

Gryffindor Company: Sales 3,000,000 Cost of sales 1,500,000 Net Income 550,000 Intercompany sales: Gryffindor to Hufflepuff 400,000

Hufflepuff Company: Sales 1,500,000 Cost of sales 900,000 Net Income 90,000 Intercompany sales: Hufflepuff to Gryffindor 300,000

There were no intercompany sales prior to 2021.

During 2022 the following intercompany transfer of fixed assets occur.

On January 1, Hufflepuff sold a machinery with cost of 120,000, originally purchased last January 3, 2018 with 8 years useful life. Selling price is 40,000.

On June 30, Gryffindor sold an equipment with book value of 60,000 for 100,000, Remaining useful life of the equipment is 5 years

Intercompany inventories held by the affiliated companies are shown below.

Gryffindor Hufflepuff Company Company

January 1, 2022 Gryffindor Company: 30,000 Hufflepuff Company: 60,000

December 31, 2022 Gryffindor Company: 70,000 Hufflepuff Company: 40,000

1. Compute for consolidated gross profit. 2. Compute net income attributable to parent.

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