transactions plant assets

8/20/2019 Transactions Plant Assets

1/28

Chapter 6 Test Bank

INTERCOMPANY PROFIT TRANSACTIONS - PLANT ASSETS

Multiple Choie !uestions

"se the #ollo$in% in#or&ation #or 'uestions ( an) *+

In *,,. Parrot Co&pan/ sol) lan) to its su0si)iar/. Tree

Corporation. #or 1(*.,,,+ It ha) a 0ook 2alue o# 1(,.,,,+ In

the ne3t /ear. Tree sol) the lan) #or 1(4.,,, to an

una##iliate) #ir&+

LO(

(+ 5hih o# the #ollo$in% is orret

a+ No onsoli)ation $orkin% paper entr/ $as neessar/ in *,,+

0+ A onsoli)ation $orkin% paper entr/ $as re'uire) onl/ i#

the su0si)iar/ $as less than (,,7 o$ne) in *,,+

+ A onsoli)ation $orkin% paper entr/ is re'uire) eah /ear

until the lan) is sol) outsi)e the relate) parties+

)+ A onsoli)ate) $orkin% paper entr/ $as re'uire) onl/ i# the

lan) $as hel) #or resale in *,,+

LO(

*+ The *,, unreali8e) %ain

a+ $as )e#erre) until *,,6+

0+ $as eli&inate) #ro& onsoli)ate) net ino&e 0/ a $orkin%paper entr/ that re)ite) lan) 1*.,,,+

+ &a)e onsoli)ate) net ino&e 1*.,,, less than it $oul) ha2e

0een ha) the sale not ourre)+

)+ &a)e onsoli)ate) net ino&e 1*.,,, %reater than it $oul)

ha2e 0een ha) the sale not ourre)+

9*,,: Pearson E)uation. In+ pu0lishin% as Prentie ;all

6-(


2/28

LO(

. Ea%le Corporation sol) e'uip&ent $ith a

0ook 2alue o# 1,.,,, an) a *,-/ear re&ainin% use#ul li#e to

its $holl/-o$ne) su0si)iar/. Ra00it Corporation. #or 16,.,,,+

Both Ea%le an) Ra00it use the strai%ht-line )epreiation

&etho). assu&in% no sal2a%e 2alue+ On ?ee&0er . the

separate o&pan/ #inanial state&ents hel) the #ollo$in%

0alanes assoiate) $ith the e'uip&ent@Ea%le Ra00it

ain on sale o# e'uip&ent 1 *,.,,,

?epreiation e3pense 1 +

On ?ee&0er . Corella Corporation sol) e'uip&ent $ith a

three-/ear re&ainin% use#ul li#e an) a 0ook 2alue o# 1*(.,,, to

its ,7-o$ne) su0si)iar/ ;ollo$ Co&pan/ #or a prie o# 1*.,,,+

Corella 0ou%ht the e'uip&ent #our /ears a%o #or 1:.,,,+

LO(

+ 5hat $as the intero&pan/ sale i&pat on the onsoli)ate)

#inanial state&ents #or the /ear en)e) ?ee&0er

Corellas Net Ino&e Corellas Ino&e

#ro& ;ollo$

a+ No e##et+ No e##et+

0+ No e##et+ ?erease)+

+ ?erease)+ No e##et+

)+ Inrease)+ ?erease)+

LO(

>+ 5hat $as the intero&pan/ sale i&pat on the onsoli)ate)

#inanial state&ents #or the /ear en)e) ?ee&0er

Consoli)ate) Net

Ino&e

Consoli)ate) Net

Assets

a+ No e##et+ No e##et+

0+ No e##et+ Inrease)+

+ ?erease)+ ?erease)+

)+ ?erease)+ No e##et+


6-*


3/28

LO(

6+ On =anuar/ *. *,,> Dakapo Co&pan/ sol) a truk $ith 0ook 2alue

o# 1>.,,, to Fli%htless Corporation. its o&pletel/ o$ne)

su0si)iar/. #or 16,.,,,+ The truk ha) a re&ainin% use#ul li#e

o# three /ears $ith 8ero sal2a%e 2alue+ Both #ir&s use the

strai%ht-line )epreiation &etho). an) assu&e no sal2a%e 2alue+

I# Dakapo #aile) to &ake /ear-en) e'uit/ a)ust&ents. Dakaposin2est&ent in Fli%htless at ?ee&0er $as

a+ 1>.,,, too hi%h+

0+ 1(,.,,, too lo$+

+ 1(,.,,, too hi%h+

)+ 1(>.,,, too hi%h+

LO(. *

"se the #ollo$in% in#or&ation to ans$er 'uestions throu%h (,+

On =anuar/ (. *,,. Shri&p sol) the truk to A2oet Corporation an) reor)e)

the #ollo$in% ournal entr/@

?e0it Cre)it

Cash >,.,,,

Au&ulate) )epreiation (4.,,,

Truk >.,,,

A2oet hol)s 6,7 o# Shri&p+ Shri&p reporte) net ino&e o#

1>>.,,, in *,,> an) A2oetGs separate net ino&e He3lu)es

interest in Shri&p #or *,,> $as 1:4.,,,+

LO(

+ In preparin% the onsoli)ate) #inanial state&ents #or *,,>.

the eli&ination entr/ #or )epreiation e3pense $as a

a+ )e0it #or 1>.,,,+

0+ re)it #or 1>.,,,+

+ )e0it #or 1(>.,,,+

)+ re)it #or 1(>.,,,+

LO(

4+ In the onsoli)ation $orkin% papers. the Truck aount $as

a+ )e0ite) #or 1.,,,+


6-


4/28

LO*

:+ Consoli)ate) net ino&e #or *,,> $as

a+ 1(*(.,,,+

0+ 1(*>.,,,+

+ 1(


5/28

LO*

(.,,, an) it ha) a >-

/ear re&ainin% use#ul li#e $ith no e3pete) sal2a%e 2alue+

Separate 0alane sheets #or Falon an) Ro)ent inlu)e) the

#ollo$in% e'uip&ent an) au&ulate) )epreiation a&ounts on

?ee&0er @

Falon Ro)ent

E'uip&ent 1 >,.,,, 1 ,.,,,

E'uip&ent-net 1 >>,.,,, 1 *>,.,,,

Consoli)ate) a&ounts #or e'uip&ent an) au&ulate) )epreiation

at ?ee&0er $ere respeti2el/

a+ 1(.,*>.,,, an) 1*>.,,,+

0+ 1(.,*>.,,, an) 1*>,.,,,+

+ 1(.,*>.,,, an) 1*>.,,,+)+ 1(.,>,.,,, an) 1*>,.,,,+

LO*

(+ Pere%rine Corporation a'uire) a :,7 interest in Cli##

Corporation in *,, at a ti&e $hen Cli##s 0ook 2alues an) #air

2alues $ere e'ual to one another+ On =anuar/ (. *,,>. Cli##

sol) a truk $ith a 1>.,,, 0ook 2alue to Pere%rine #or

1:,.,,,+ Pere%rine is )epreiatin% the truk o2er (, /ears

usin% the strai%ht-line &etho)+ Separate ino&es #or Pere%rine

an) Cli## #or *,,> $ere as #ollo$s@

Pere%rine Cli##

Sales 1 (.4,,.,,, 1 (.,>,.,,,

ain on sale o# truk >.,,,

Cost o# oo)s Sol) H >,.,,, H *4>.,,,

?epreiation e3pense H >,.,,, H (.,,,

Other e3penses H (4,.,,, H >,.,,,

Separate ino&es 1 *,.,,, 1 **>.,,,

Pere%rines in2est&ent ino&e #ro& Cli## #or *,,> $as

a+ 1(6(.>>,+

0+ 1(6*.,,,+

+ 1(66.,>,+

)+ 1*,*.>,,+


6->


6/28

LO*

(>+ Destrel Co&pan/ a'uire) an 4,7 interest in Reptile Corporation

on =anuar/ (. *,,+ On =anuar/ (. *,,>. Reptile sol) a 0uil)in%

$ith a 0ook 2alue o# 1>,.,,, to Destrel #or 14,.,,,+ The

0uil)in% ha) a re&ainin% use#ul li#e o# ten /ears an) no

sal2a%e 2alue+ The separate 0alane sheets o# Destrel an)

Reptile on ?ee&0er inlu)e) the #ollo$in% 0alanes@

Destrel Reptile

Buil)in%s 1 ,,.,,, 1 *>,.,,,

Au&ulate) ?epreiation -

Buil)in%s

(*,.,,, >.,,,

The onsoli)ate) a&ounts #or Buil)in%s an) Au&ulate)

?epreiation - Buil)in%s that appeare). respeti2el/. on the

0alane sheet at ?ee&0er . $ere

a+ 16*,.,,, an) 1(:*.,,,+

0+ 16*,.,,, an) 1(:>.,,,+

+ 16>,.,,, an) 1(:*.,,,+)+ 16>,.,,, an) 1(:>.,,,+

LO*

(6+ Pi%eon Corporation purhase) lan) #ro& its 6,7-o$ne)

su0si)iar/. See) In+. in *,,< at a ost 1. Pi%eon sol) the lan) to an outsi)e

entit/ #or 1,.,,, &ore than Pi%eons 0ook 2alue+ The *,,>

onsoli)ate) ino&e state&ent reporte) a %ain on the sale o#

lan) o#

a+ 1,.,,,+

0+ 1*.,,,+

+ 1>4.,,,+

)+ 1,.,,,+

LO*

(+ Pie) I&perial-Pi%eon Corporation a'uire) a :,7 interest in

O##shore Corporation in *,,< $hen O##shore 0ook 2alues $ere

e'ui2alent to #air 2alues+ O##shore sol) e'uip&ent $ith a 0ook

2alue o# 14,.,,, to Pie) I&perial-Pi%eon #or 1(+ Pie) I&perial-Pi%eon is #ull/ )epreiatin% the

e'uip&ent o2er a -/ear perio) 0/ usin% the strai%ht-line

&etho)+ O##shore reporte) net ino&e #or *,,> $as 1 net ino&e #ro& O##shore $as

a+ 1*:.*>,+0+ 1*>,.>,,+

+ 1*>.*>,+

)+ 1*44.,,,+


6-6


7/28

LO<

(4+ Lorikeet Corporation a'uire) a 4,7 interest in Netar

Corporation on =anuar/ (. *,,, at a ost e'ual to 0ook 2alue

an) #air 2alue+ In the sa&e /ear Netar sol) lan) ostin%

1,.,,, On =ul/ (. *,,>. Lorikeet sol)

the lan) to an unrelate) part/ #or 1((,.,,,+ 5hat $as the %ain

on the onsoli)ate) ino&e state&ent

a+ 14.,,,+

0+ 16,.,,,+

+ 16.,,,+

)+ 14,.,,,+

LO

(:+ On =anuar/ (. *,,> Rain#orest Co+ reor)e) a 1. $hen Berriess 0ook 2alues an) #air

2alues $ere e'ui2alent+ On =anuar/ (. *,,>. Berries sol) a

0uil)in% $ith a 0ook 2alue o# 16,,.,,, to S$i#t Parrot #or

1,,.,,,+ The 0uil)in% ha) a re&ainin% li#e o# (, /ears. no

sal2a%e 2alue. an) $as )epreiate) 0/ the strai%ht-line &etho)+Berries reporte) net ino&e o# 1*.,,,.,,, #or *,,>+ 5hat $as

the nonontrollin% interest #or *,,>

a+ 1(,.,,,+

0+ 16.,,,+

+ 14,,.,,,+

)+ 1:,,.,,,+


6-


8/28

LO(

E3erise (

Spini#le3 Pi%eon Co&pan/ o$ns :,7 o# the outstan)in% stok o#

5aterhole Corporation+ This interest $as purhase) on =anuar/ (.

(:::. $hen 5aterholes 0ook 2alues $ere e'ual to its #air 2alues+ The

a&ount pai) 0/ Spini#le3 Pi%eon inlu)e) 1(,.,,, #or %oo)$ill+

On =anuar/ (. *,,,. Spini#le3 Pi%eon purhase) e'uip&ent #or 1(,,.,,,

$hih ha) no sal2a%e 2alue $ith a use#ul li#e o# 4 /ears+ on a

strai%ht-line 0asis+ On =anuar/ (. *,,>. Spini#le3 Pi%eon sol) the

truk to 5aterhole Corporation #or 1,.,,,+ The e'uip&ent $as

esti&ate) to ha2e a #our-/ear re&ainin% li#e on this )ate+ All

a##iliates use the strai%ht-line )epreiation &etho)+

Re'uire)@

Prepare all rele2ant entries $ith respet to the truk+

(+ Reor) the ournal entries on Spini#le3 Pi%eons 0ooks #or *,,>+

*+ Reor) the ournal entries on 5aterholes 0ooks #or *,,>+


6-4


9/28

LO(*

E3erise *

Stork Corporation pai) 1(>.,, #or a :,7 interest in S$a&p

Corporation on =anuar/ (. *,,. $hen S$a&p stokhol)ers e'uit/

onsiste) o# 1(,.,,, Capital Stok an) 1 S$a&p o$e) Stork 1(.>,, #or the in2entor/ purhase) )urin%

*,,>+

*+ Stork Corporation sol) e'uip&ent $ith a 0ook 2alue o# 1*.,,, an)

a re&ainin% use#ul li#e o# #our /ears an) no sal2a%e 2alue toS$a&p Corporation on =anuar/ (. *,,> #or 1*.4,,+


10/28

Stork Corporation an) Su0si)iar/

Consoli)ation 5orkin% Papers

at ?ee&0er

Stork S$a&p

Eli&inations Non-

Cntrl+

Balane

Sheet?e0it Cre)it

INCOME STATEMENT

Sales 1 6,.,,, 1(.,,,Ino&e #ro&

S$a&p .>,,

ain on

e'uip&ent sale 4,,

Cost o# Sales H *6.,,, H .,,

Other E3penses H *4.,,, H .,,,

A))@ Net ino&e ((.


11/28

E3erise <

?o2e Corporation a'uire) all o# the outstan)in% 2otin% o&&on stok

o# the S'ua0 Corporation se2eral /ears a%o $hen the 0ook 2alues an)

#air 2alues o# S'ua0s net assets $ere e'ual+

On April (. *,,.,,, to S'ua0 #or

1,.,,,+ S'ua0 resol) the lan) #or 1>.,,, on ?ee&0er (. *,,>+

On =ul/ (. *,,>. ?o2e sol) e'uip&ent $ith a 0ook 2alue o# 1(,.,,, to

S'ua0 #or 1*6.,,,+ S'ua0 is )epreiatin% the e'uip&ent o2er a #our-

/ear perio) usin% the strai%ht-line &etho)+

Re'uire)@

The #irst t$o olu&ns in the $orkin% papers presente) 0elo$ su&&ari8e

ino&e state&ent in#or&ation #ro& the separate o&pan/ #inanial

state&ents o# ?o2e an) S'ua0 #or the /ear en)e) ?ee&0er +

Fill in the onsoli)ate) $orkin% paper olu&ns to sho$ ho$ eah o#

the ite&s #ro& the separate o&pan/ reports $ill appear in the

onsoli)ate) ino&e state&ent+

?o2e S'ua0 Consoli)ate)

Sales >,.,,, *,,.,,,

Ino&e #ro& S'ua0 6.,,,

ain on sale o# e'uip&ent (6.,,,

ain on sale o# lan) >.,,,

Cost o# sales H *((.>,, H :(.>,,

?epreiation e3pense H >.>,, H *,,

Other e3penses H (*,.,,, H 6.,,,


6-((


12/28

LO(*

E3erise

Brol%a Corporation pai) 1*6.4,, ash #or a ,7 interest in ?ane

Co&pan/ on =anuar/ (. *,,. $hen ?anes stokhol)ers e'uit/

onsiste) o# 1(>.,,, Capital Stok an) 1:.,,, o# Retaine) Earnin%s+

A))itional in#or&ation@

(+ The ost-0ook 2alue )i##erential $as alloate) to a patent $ith

a *,-/ear a&orti8ation perio)+

*+ Brol%a Corporation sol) in2entor/ ite&s that ost 1.,,, to

?ane #or 1.4,, )urin% *,, an) one-hal# o# these in2entor/

ite&s re&aine) unsol) 0/ ?ane on ?ee&0er .,,, to ?ane #or 16.,,, an) +

+ Brol%a Corporation sol) e'uip&ent $ith a >-/ear re&ainin% li#e

an) a 0ook 2alue o# 1.,,, to ?ane #or 1>.,,, on =anuar/ (.

*,,>+ Strai%ht-line )epreiation is use)+

>+ Brol%a an) ?ane pa/ annual )i2i)en)s o# 1(,.,,, an) 1


13/28

Brol%a Corporation an) Su0si)iar/


at ?ee&0er

Brol%a ?ane

Eli&inations Non-

Cntrl+

Consol-

i)ate)?e0it Cre)it

INCOME STATEMENT

Sales 1 :,.,,, 1.,,,Ino&e #ro&

?ane *.


14/28

LO*

E3erise >

Barn O$l Corporation a'uire) ,7 o# the outstan)in% 2otin% stok o#

Ca2e In+ on =anuar/ (. *,,< #or 16,.,,, less than 0ook 2alue+ The

16,.,,, re)ution $as all assi%ne) to a trator+ The trator ha) a

re&ainin% li#e o# (> /ears+ On April (. *,,.,,, on Oto0er (. *,,>+ Barn O$l sol) e'uip&ent

#or 1:6.,,, to Ca2e on =anuar/ (. *,, $hih ha) a 0ook 2alue o#

14,.,,,+ The e'uip&ent ost Barn O$l 1*.,,,+ The e'uip&ent ha) a

re&ainin% use#ul li#e o# 4 /ears on the sale )ate an) is )epreiate)

un)er the strai%ht-line &etho)+

Re'uire)@

Prepare a she)ule #or the alulation o# onsoli)ate) net ino&e #or

Barn O$l an) su0si)iar/ #or *,,+

*,,< *,, *,,>

Barn O$ls separate ino&e .,,, 6,.,,,

Ca2es net ino&e :,.,,, ((,.,,, (*,.,,,

LO*

E3erise 6

Separate ino&e state&ents o# Ni%htar Corporation an) its :,7-o$ne)

su0si)iar/. Branh In+. #or *,,> $ere as #ollo$s@

Ni%htar Branh

Sales Re2enue 1 *.,,,.,,, 1 (.*,,.,,,

Cost o# sales H (.*,,.,,, H 4,,.,,,

Other e3penses H ,,.,,, H *,,.,,,

ain on e'uip&ent 4,.,,,

Ino&e #ro& Branh (4,.,,,

Net ino&e 1 66,.,,, 1 *,,.,,,

A))itional in#or&ation@

(+ Ni%htar a'uire) its :,7 interest in Branh In+ $hen the 0ook

2alues $ere e'ual to the #air 2alues+

*+ The %ain on e'uip&ent relates to e'uip&ent $ith a 0ook 2alue o#

1(*,.,,, an) a -/ear re&ainin% use#ul li#e that Branh sol) to

Ni%htar #or 1*,,.,,, on =anuar/ *. *,,>+ The strai%ht-line

)epreiation &etho) is use)+

+


6-(


15/28

*,, *,,>

Intero&pan/ sales 1 ,

Re'uire)@

Prepare a onsoli)ate) ino&e state&ent #or Ni%htar Corporation an)Su0si)iar/ #or the /ear en)e) ?ee&0er +

LO*<

E3erise

Ospre/ Corporation reate) a $holl/ o$ne) su0si)iar/. Branh

Corporation. on =anuar/ (. *,,.Branh resol) the lan) to an outsi)e entit/ #or 1(>,.,,,+ Branh

ontinues to use the e'uip&ent purhase) #ro& Ospre/+

Ino&e state&ents #or Ospre/ an) Branh #or the /ear en)e) ?ee&0er

are su&&ari8e) 0elo$@

Ospre/ Branh

Sales 1 >,.,,, 1 (,,.,,,

ain on sale o# lan) (,.,,,

Ino&e #ro& Branh >>.,,,

Cost o# sales H **,.,,, H >,.,,,

?epreiation e3pense H :>.,,, H


16/28

LO<

E3erise 4

Separate ino&e state&ents o# !uail Corporation an) its 4,7-o$ne)

su0si)iar/. Sa2annah Corporation. #or *,,> are as #ollo$s@

!uail Sa2annah

Sales Re2enue 1 4,,.,,, 1


17/28

LO<

E3erise :

Casso$ar/ Corporation a'uire) a ,7 interest in Fruit Corporation in

(::: at a ti&e $hen Fruits 0ook 2alues an) #air 2alues $ere e'ual+

In *,, $hen Casso$ar/

sol) it outsi)e the o&0ine) entit/ #or 1(,*.,,,+

A#ter the 0ooks $ere lose) in *,,>. it $as )iso2ere) that Casso$ar/

ha) not onsi)ere) the unreali8e) %ain #ro& its intero&pan/ purhase

o# lan) in preparin% the onsoli)ate) #inanial state&ents+ The onl/

entr/ on Casso$ar/s 0ooks $as a )e0it to Lan) an) a re)it to Cash

in *,,< #or 14*.,,,. an). in *,,>. a )e0it to Cash #or 1(,*.,,, an)

re)its to Lan) #or 14*.,,, an) ain on sale o# lan) #or 1*,.,,,+

Be#ore the )iso2er/ o# the error. the onsoli)ate) #inanial

state&ents )islose) the #ollo$in% a&ounts@

*,,< *,, *,,>

Consoli)ate) net ino&e 1 >,.,,, 1 6,,.,,, 1 :(,.,,,

Lan) *,,.,,, *,.,,,


18/28

LO*

E3erise (,

Bu88ar) Corporation a'uire) ,7 o# the outstan)in% 2otin% o&&on

stok o# Tool In+ in (::4+ On =anuar/ (. (:::. Tool In+ purhase) a

)epreia0le &ahine #or 1(*,.,,, ash $ith an esti&ate) use#ul li#e

o# (, /ears that $as )epreiate) on a strai%ht-line 0asis+ Tool use)

the &ahine until the en) o# *,,+ On =anuar/ *. *,,>. Tool sol) the&ahine to Bu88ar) $ho ontinue) to use the sa&e esti&ate) li#e an)

)epreiation &etho) that $as use) 0/ Tool+

At the en) o# *,,>. Bu88ar) &a)e the #ollo$in% eli&ination entr/ in

the onsoli)ation $orkin% papers+

Mahine **.,,,

ain on Sale o# Mahine (.,,,

?epreiation E3pense *.,,,

Au&ulate) ?epreiation

*+ 5hat a&ounts $ere reporte) #or the Mahine an) the Au&ulate)

?epreiation in the onsoli)ate) 0alane sheet on ?ee&0er

. $hat a&ount $as

assi%ne) to the non-ontrollin% interest


6-(4


19/28

SOL"TIONS

Multiple Choie !uestions

(

* 0

<

a

> a

6 )

0 H1(>.,,, %ainJ < /ears

4 a H1>,.,,,

: 0 1:4.,,, K H1>>.,,, - 1(>.,,, K

1>.,,, 3 6,7 1 (*>.,,,

(, a H1>>.,,, - 1(>.,,, K 1>.,,, 3

,7 1 (4.,,,

(( a

(* )

(< a Co&0ine) e'uip&ent a&ounts 1 (.,>,.,,,

Less@ %ain on sale H *>.,,,

Consoli)ate) e'uip&ent 0alane 1 (.,*>.,,,

Co&0ine) Au&ulate) ?epreiation 1 *>,.,,,

Less@ ?epreiation on %ain H >.,,,

Consoli)ate) Au&ulate)

?epreiation 1 *>.,,,

( Cli## reporte) ino&e 1 **>.,,,

Less@ Intero&pan/ %ain on truk H >.,,,

Plus@ Piee&eal reo%nition o#

%ain 1>.,,,J(, /ears .>,,

Cli##s a)uste) ino&e (4.>,,

Maorit/ perenta%e :,7

Ino&e #ro& Cli## 1 (66.,>,


6-(:


20/28

(> a Co&0ine) 0uil)in% a&ounts 1 6>,.,,,

Less@ Intero&pan/ %ain H .,,,

Less@ Piee&eal reo%nition o#

%ain H ,

Ino&e #ro& O##shore 1 *>.*>,

(4 )

(: 1


21/28

E3erise (

Re'uire&ent (@ Spini#le3 Pi%eons 0ooks

,(J,(J,> Cash ,.,,,

Au&ulate) ?epreiation 6*.>,,

E'uip&ent (,,.,,,

ain on Sale *.>,,

Re'uire&ent *@ 5aterholes 0ooks

,(J,(J,> E'uip&ent ,.,,,

Cash ,.,,,

(*J ?epreiation E3pense .>,,

Au&ulate) ?epreiation .>,,

E3erise *

Stork Corporation an) Su0si)iar/


at ?ee&0er

Stork S$a&p

Eli&inations Non-

ontl+

Consol-

i)ate)?e0it Cre)it

INCOME STATEMENT

Sales 1 6,.,,, 1(.,,, a 1 6.,,, 164.,,,

Ino&e #ro&

S$a&p .>,, e .>,,

ain on

e'uip&ent sale 4,, ) 4,,

Cost o# Sales H *6.,,, H .,,

0 6,, a

1 6.,,,

,, H*.6,,

Other E3penses H *4.,,, H .,,, :.>,,

A))@ Net ino&e ((.


22/28

oo)$ill # .,,, % .,,,

TOTAL ASSETS 1 ,.4,, 1*.,,, 16.,,

Other E3penses H *.>,, H 4.,,, h >,, H .,,, (*.,,, % (*.,,, *>.,,,


6-**


23/28

A))@ Net ino&e **.4,, >.,,, **.4,,

?i2i)en)s H (,.,,, H , (.,>,

In2entories (*.,,, 6.,,,


24/28

E3erise >

*,,< *,, *,,>

Barn O$ls separate ino&e .,,, 6,.,,,

Ca2es net ino&e :,.,,, ((,.,,, (*,.,,,

Trator A)ust&ent .,,, .,,, .,,,

Lan) %ain H,.,,, .,,,

Minorit/ Interest E3pense

((,.,,,+<

H.,,,+


25/28

E3erise 6

Ni%htar Corporation an) Su0si)iar/

Consoli)ate) Ino&e State&ent

#or the /ear en)e) ?ee&0er

Sales Hsee 0elo$ 1 4,.,,,

Minorit/ interest Hsee 0elo$ H *,.,,,

Consoli)ate) net ino&e 1 6,4.,,,

Sales@

1*.,,,.,,, K (.*,,.,,, - *,,.,,, 1 4,.,,,

Minorit/ ino&e

Net ino&e #ro& Branh 3 (,7@ H1*,,.,,, 3 (,7 1 *,.,,,


6-*>


26/28

E3erise

Re'uire&ent (

The %ain on the sale o# the lan) in *,,> $as e'ual to the sales prie

&inus the ori%inal ost o# the lan) $hen it $as #irst a'uire) 0/ the

o&0ine) entit/+ In this ase the %ain $as 1(>,.,,, - 1:,.,,,. or

16,.,,,+

Re'uire&ent *

The onsoli)ate) a&ount o# )epreiation e3pense $as the o&0ine)

a&ounts o# )epreiation e3pense sho$in% on the separate ino&e

state&ents &inus the piee&eal reo%nition o# the %ain on the sale o#

the e'uip&ent+ Thus. the onsoli)ate) a&ount o# )epreiation e3pense

$as 1:>.,,, K 1,+

Re'uire&ent <

Consoli)ate) net ino&e@

Ospre/ separate ino&e Hnot inlu)in% Ino&e

#ro& Branh 1(>>.,,, 1 :4.,,,

Ino&e #ro& Branh *,.,,,

Plus@ ?e#erre) %ain on lan) >,.,,,

Plus@ Piee&eal reo%nition o# %ain on e'uip-

&ent sale@ 1.,,, %ainJ /ears 4.>,

Consoli)ate) net ino&e 1(6.>,

E3erise 4

!uail Corporation an) Su0si)iar/

Consoli)ate) Ino&e State&ent

#or the /ear en)e) ?ee&0er

Sales 1 (.(,,.,,,

ain on lan) H1*,.,,, K 1*>.,,, >.,,,

Cost o# sales H >6,.,,,

Other e3penses Hsee 0elo$ H .,,,

Other e3penses@

1*6>.,,, K 16,.,,, - 1>.,,, piee&eal reo%nition o#

%ain on e'uip&ent 1


27/28

E3erise :

Re'uire&ent ( *,,< *,, *,,>

Consoli)ate) net ino&e as

reporte) 1 >,.,,, 1 6,,.,,, 1 :(,.,,,

Less@ 1(,.,,, )e#erre) %ain -(,.,,,

Plus@ Minorit/ interest

portion o# the %ain


28/28

E3erise (,

Re'uire&ent (

On the onsoli)ate) 0alane sheet. the &ahine &ust 0e reporte) at

its ori%inal ost $hen Tool purhase) it on =anuar/ (. (:::. $hih is

1(*,.,,,+ Sine the eli&ination entr/ )e0ite) the &ahine aount #or1**.,,, $hih &ust 0e the a&ount nee)e) to 0rin% the &ahine aount

up to 1(*,.,,,. Bu88ar) &ust ha2e reor)e) the &ahine at 1:4.,,,+

Sine the re&ainin% use#ul li#e is se2en /ears. Bu88ar) $ill reor)

1(.,,, o# )epreiation e3pense eah /ear+

Re'uire&ent *

The orret 0alanes on the onsoli)ate) 0alane sheet #or the

Mahine an) Au&ulate) ?epreiation aounts are the 0alanes that

$oul) 0e in the aounts i# there ha) 0een no sale+ The 0alane in

the &ahine aount $oul) 0e the ori%inal purhase prie to Tool or

1(*,.,,,+ The 0alane in the Au&ulate) ?epreiation aount $ill 0e

the ori%inal a&ount o# annual )epreiation. H1(*.,,, ti&es the

nu&0er o# /ears the &ahine has 0een )epreiate) H. or 14.,,,+

Re'uire&ent <

The &inorit/ interest ino&e $ill 0e

transactions plant assets

Documents