Question
Presented below are several figures reported for Plate Corporation and Saucer Industries as of December 31, 2014. Plate has owned 70% of Saucer for the
Presented below are several figures reported for Plate Corporation and Saucer Industries as of December 31, 2014. Plate has owned 70% of Saucer for the past five years, and at the time of purchase, the book value of Saucer's assets and liabilities equaled the fair value. The cost of the 70% investment was equal to 70% of the book value of Saucer's net assets. At the time of purchase, the fair values and book values of Saucer's assets and liabilities were equal. Plate Saucer Inventory $120,000 $60,000 Sales 200,000 140,000 Cost of Goods Sold 130,000 80,000 Expenses 40,000 30,000 In 2013, Saucer sold inventory to Plate which had cost $40,000 for $60,000. 25% of this inventory remained on hand at December 31, 2013, but was sold in 2014. In 2014, Saucer sold inventory to Plate which had cost $30,000 for $45,000. 40% of this inventory remained unsold at December 31, 2014. (30 Marks) Required: 1- Calculate the following: parents share of subsidiary net income in 2014 non-controlling interest share of subsidiary net income in 2014 (6 marks) 2- Prepare the required elimination entries in 2014. (Parent entries are not required) (16.5 marks) 3- Prepare the working paper for consolidated Income Statement for 2014 (5.5 marks) 4- Calculate the consolidated Inventory at December 31, 2014
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