Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc, on January 1,2020 , when Scenic had a net book value

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc, on January 1,2020 , when Scenic had a net book value of $420,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $5,000 per year Placid Lake's 2021 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $320,000. Scenic reported net income of $130,000. Placid Lake declared $120,000 in dividends during this period; Scenic paid $42,000. At the end of 2021, selected figures from the two companies' balance sheets were as follows: During 2020, intra-entity sales of $85,000 (original cost of $46,000 ) were made. Only 20 percent of this inventory was still held within the consolidated entity at the end of 2020 . In 2021, $110,000 in intra-entity sales were made with an original cost of $61,000. Of this merchandise, 30 percent had not been resold to outside parties by the end of the year. Each of the following questions should be considered as an independent situation for the year 2021. a. What is consolidated net income for Placid Lake and its subsidiary? b. If the intra-entity sales were upstream, how would consolidated net income be allocated to the controlling and noncontrolling interest? c. If the intra-entity sales were downstream, how would consolidated net income be allocated to the controlling and noncontrolling interest? d. What is the consolidated balance in the ending Inventory account? e. Assume that no intra-entity inventory sales occurred between Placid Lake and Scenic. Instead, in 2020, Scenic sold land costing $32,000 to Placid Lake for $54,000. On the 2021 consolidated balance sheet, what value should be reported for land? f-1. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2020, Scenic sold equipment (that originally cost $120,000 but had a $62,000 book value on that date) to Placid Lake for $84,000. At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December 31,2021 . consolidation of these two companies to eliminate the impact of the intra-entity transfer? 1.2. Aserime that mn intra.entitv inventorv or land sales neriurred hetween Plaridt I ake and Srenir Instead on lanuarv 1 ono S Segir During 2020 , intra-entity sales of $85,000 (original cost of $46,000 ) were made. Only 20 percent of this inventory was still held within the consolidated entity at the end of 2020 . In 2021, $110,000 in intra-entity sales were made with an original cost of $61,000. Of this merchandise, 30 percent had not been resold to outside parties by the end of the year. Each of the following questions should be considered as an independent situation for the year 2021 a. What is consolidated net income for Placid Lake and its subsidiary? b. If the intra-entity sales were upstream, how would consolidated net income be allocated to the controlling and noncontrolling interest? c. If the intra-entity sales were downstream, how would consolidated net income be allocated to the controling and noncontrolling interest? d. What is the consolidated balance in the ending inventory account? e. Astume that no intra-entity inventory sales occurred between Placid Lake and Scenic, Instead, in 2020, Scenic sold land costing $32,000 to Placid Lake for $54,000. On the 2021 consolidated balance sheet, what value should be reported for land? f-1. Assume that no intra-entity inventory or land sales occlrred between Placid Lake and Scenic. Instead, on January 1, 2020, Scenic sold equipment (that originally cost $120,000 but had a $62,000 book value on that date) to Placid Lake for $84,000. At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December 31, 2021, consolidation of these two companies to eliminate the impoct of the intra-entity transfer? 1-2. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2020, Scenic - sold equipment (that originally cost $120,000 but had a $62,000 book value on that date) to Placid Lake for $84,000. At the time of sale, the equipment had a remaining useful life of five years. For 2021, what is the noncontrolling interest's share of Scenic's net income? Complete this question by entering your answers in the tabs below. What is consolidated net income for Placid Lake and its subsidiary? b. If the intra-entity sales were upstream, how would consolidated net income be allocated to the controlling and noncontrolling interest? c. If the intra-entity sales were downstream, how would consolidated net income be allocated to the controlling and noncontrolling interest? Complete this question by entexing your answers in the tabs below. d. What is the consolidated balance in the ending Inventory account? e. Assume that no intra-entity inventory sales occurred between Placid Lake and Scenic. Instead, in 2020, Scenic sold land costing $32,000 to Placid Lake for $54,000. On the 2021 consolldated balance sheet, what value should be reported for land? Assume that no intra-entity inventory of land sales occurred between Placid Lake and Scenic, Instead, on January 1,2020 , Sceric soid equipment (that origlnally cost $120 po00 but had a $62,000 book value on that date) to Placid Lake for $84,000. At the time of sole, the equipment had a remainng useful life of five years. What worksheet entries are made for a December 31, 2021, consolidation of these two companies to eliminate the impact of the intra-entity transfer? (If no entry is required for a transaction/event, select "No fournal entry required" in the first account field.) Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1,2020 , Scenic sold equipment (that originally cost $120,000 but had a $62,000 book value on that date) to Placid Lake for $84,000. At the time of sale, the equipment had a remaining useful life of five years. For 2021 , what is the noncontrolling interest's share of Scenic's net income

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Cost Accounting A Managerial Emphasis

Authors: Charles T. Horngren, Foster George, Srikand M. Datar, Maureen P. Gowing

5th Canadian Edition

0135004934, 978-0135004937

More Books

Students also viewed these Accounting questions

Question

3. If possible, break the presentation into clear steps or stages.

Answered: 1 week ago

Question

What are the advantages and disadvantages of flextime?

Answered: 1 week ago

Question

What could Kathy have done to keep the situation from occurring?

Answered: 1 week ago

Question

How can Seaview improve their benefits communication? Discuss.

Answered: 1 week ago