Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 5-19 (Algo) (LO 5-1, 5-3, 5-4, 5-5, 5-6, 5-7) Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc, on

image text in transcribed
image text in transcribed
image text in transcribed
Problem 5-19 (Algo) (LO 5-1, 5-3, 5-4, 5-5, 5-6, 5-7) 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 $630,000 Any excess fair value was assigned to intangible assets and amortized at a rate of $6,000 per year: Placid Lake's 2021 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $530,000. Scenic reported net income of $340,000. Placid Lake declared $160,000 in dividends during this period, Scenic paid $63,000. At the end of 2021 , selected figures from the two companies' balance sheets were as follows: During 2020, intra-entity sales of $190,000 (original cost of $88,000 ) were made. Only 20 percent of this inventory was still held within the consolidated entity at the end of 2020 In 2021,$320,000 in intra-entity sales were made with an original cost of $82,000. Of this merchandise, 30 percent had not been resold to outside parties by the end of the year. Complete this question by entering your answers in the tabs below. 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 entering your answers in the tabs below. Assurhe 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 $160,000 but had a $83,000 book value on that date) to Placid Lake for $116,000. 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? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

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

Food And Beverage Cost Control

Authors: Lea R. Dopson, David K. Hayes, Jack E. Miller

4th Edition

0471694177, 978-0471694175

More Books

Students also viewed these Accounting questions

Question

What is cultural tourism and why is it growing?

Answered: 1 week ago

Question

Describe how to train managers to coach employees. page 422

Answered: 1 week ago