Problem 6-8 (LO 3) Worksheet, consolidated taxation, simple equity, inventory, fixed asset sale. Refer to the preceding facts for Parsons acquisition of Solar common stock. Parson uses the simple equity method to account for its investment in Solar. During 2016, Solar sells $30,000 worth of merchandise to Parson. As a result of these intercompany sales, Parson holds beginning inventory of $12,000 and ending inventory of $16,000 of merchandise acquired from Solar.
Problem 6-8 (LO3) Worksheet, consolidated taxation, simple equity, inventory fixed asset sale. Refer to the preceding facts for Parson's acquisition of Solar common stock. Parson uses the simple equity method to account for its investment in Solar. During 2016, Solar sells $30,000 worth of merchandise to Parson. As a result of these intercompany sales, Parson holds inventory of $12,000 and ending inventory of $16,000 of merchandise acquired from Solar. At December 31, 2016, Parson owes Solar $6,000 from merchandise sales. Solar has a gross profit rate of 30%. On January 1, 2015, Parson sells equipment having a net book value of $50,000 to Solar for $80,000. The equipment has a 5-ycar useful life and is depreciated using the straight-line Neither company has provided for income tax. The companies qualify as an affiliated group and, thus, will file a consolidated tax return based on a 40% corporate tax rate. The original purchase is not a nontaxable exchange. On December 31, 2016, Parson and Solar have the following trial balances: Parson Solar Cash 46,080 150,600 105,000 00,000 567,200 800,000 54,000 90,000 90,000 150,000 Land Investment in Solar Buildings 250,000 (250,000 70,000) 120,000 115,000 90,000) 210,000 po,0001,140,0001 (100,000) Accounts Payable 2,880 Common Stock Paid-In Capital in Excess of Par Retained Earmings, January 1, 2016... Sales Cost of Goods Sold 100,000 (10,000) (600,000 190,000) (622,400) (222,000) (890,000 (350,000) 480,000 220,000 10,000 10,000 60,000 8,000 . 30,000 25,000 150,000 Subsidiary Income Dividends Declared 33,600 20,000 10,000 Totals Problem 6-8 (LO3) Worksheet, consolidated taxation, simple equity, inventory fixed asset sale. Refer to the preceding facts for Parson's acquisition of Solar common stock. Parson uses the simple equity method to account for its investment in Solar. During 2016, Solar sells $30,000 worth of merchandise to Parson. As a result of these intercompany sales, Parson holds inventory of $12,000 and ending inventory of $16,000 of merchandise acquired from Solar. At December 31, 2016, Parson owes Solar $6,000 from merchandise sales. Solar has a gross profit rate of 30%. On January 1, 2015, Parson sells equipment having a net book value of $50,000 to Solar for $80,000. The equipment has a 5-ycar useful life and is depreciated using the straight-line Neither company has provided for income tax. The companies qualify as an affiliated group and, thus, will file a consolidated tax return based on a 40% corporate tax rate. The original purchase is not a nontaxable exchange. On December 31, 2016, Parson and Solar have the following trial balances: Parson Solar Cash 46,080 150,600 105,000 00,000 567,200 800,000 54,000 90,000 90,000 150,000 Land Investment in Solar Buildings 250,000 (250,000 70,000) 120,000 115,000 90,000) 210,000 po,0001,140,0001 (100,000) Accounts Payable 2,880 Common Stock Paid-In Capital in Excess of Par Retained Earmings, January 1, 2016... Sales Cost of Goods Sold 100,000 (10,000) (600,000 190,000) (622,400) (222,000) (890,000 (350,000) 480,000 220,000 10,000 10,000 60,000 8,000 . 30,000 25,000 150,000 Subsidiary Income Dividends Declared 33,600 20,000 10,000 Totals
