Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please answer all the parts of the question PART B: Intercompany transactions and relevant information Presented below are several figures reported for the parent company
Please answer all the parts of the question
PART B: Intercompany transactions and relevant information Presented below are several figures reported for the parent company and its subsidiary: P owns a 90% interest in S acquired at book value equal to fair value at the beginning of 20X1. Separate incomes 20X1 __ P S Combined Sales $500,000 $300,000 $800,000 Cost of sales (300,000) (200,000) (500,000) Expenses (100,000). (50,000) (150,000) Separate incomes $100,000 S 50,000 $150,000 Additional information: 1 2 Intercompany sales in 20XI were $50,000. Cost of inventory items sold intercompany was $40,000 and the intercompany profit was $10,000. Unrealized profit at year-end 20XI was $5,000. 3 Separate incomes 20X2 Combined Sales $550,000 $350,000 $900,000 Cost of Sales (300,000) (200,000) (500,000) Expenses (140,000) (90,000) (230,000) Separate incomes $110,000 $ 60,000 $170,000 Additional information: 1 Intercompany sales in 20X2 were $80,000. 2 Cost of inventory items sold intercompany was $50,000 and the intercompany profit was $30,000. 3 Unrealized profit at year-end 20X2 was $10,000. 4 All intercompany profit deferred in 20XI was realized in 20X2. Required: Prepare the required elimination entries in 20x1 & 20X2(Show your computations) assuming: a- It is a downstream sale b- It is an upstream sale (30 marks)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started