Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc., on January 1, 2012, when Scenic had a net book value of $510,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $4,000 per year.

Placid Lake's 2013 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $410,000. Scenic reported net income of $220,000. Placid Lake distributed $100,000 in dividends during this period; Scenic paid $51,000. At the end of 2013, selected figures from the two companies' balance sheets were as follows:

Placid Lake
Corporation Scenic, Inc.
Inventory $ 250,000 $ 101,000
Land 710,000 310,000
Equipment (net) 510,000 410,000

During 2012, intra-entity sales of $130,000 (original cost of $64,000) were made. Only 20 percent of this inventory was still held within the consolidated entity at the end of 2012. In 2013, $200,000 in intra-entity sales were made with an original cost of $70,000. Of this merchandise, 30 percent had not been resold to outside parties by the end of the year.

Each of the following problems should be considered as an independent situation for the year 2013.

a. What is consolidated net income for Placid Lake and its subsidiary?

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?

 

d. What is the consolidated balance in the ending Inventory account?

e.Assume that no intra-entity inventory sales occurred between Placid Lake and Scenic. Instead, in 2012, Scenic sold land costing $41,000 to Placid Lake for $72,000 . On the 2013 consolidated balance sheet, what value should be reported for land?

 

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M940797

Have any Question? 


Related Questions in Accounting Basics

Accounting assignment1 in the context of present value

Accounting Assignment 1. In the context of present value analysis, what is the discount rate? How does the discount rate affect the present value calculation? If the present value of a future return is calculated using a ...

Accounting assignmentgrant film products wishes to expand

Accounting Assignment Grant Film Products wishes to expand and has borrowed $100,000. As a condition for making this loan, the bank requires that the business maintain a current ratio of at least 1.50. Business has been ...

Course project portfolio of international accounting

Course Project: Portfolio of International Accounting Findings Throughout your course work, you explored topics such as cost and revaluation models of accounting, revenue recognition, assets and liabilities, translation ...

Assignmentapplication break-even analysiswhen expenses and

Assignment Application: Break-Even Analysis When expenses and revenues are equal, this is known as the "break-even point" or BEP. To determine break-even, an examination of fixed and variable costs (expenses) in relation ...

Consider the following scenarioandre has asked you to

Consider the following scenario: Andre has asked you to evaluate his business, Andre's Hair Styling. Andre has five barbers working for him. (Andre is not one of them.) Each barber is paid $9.90 per hour and works a 40-h ...

A tractor acquired on january 4 of the current year at a

A tractor acquired on January 4 of the current year at a cost of $100,000 has an estimated life of 10 years. Assuming that it has a residual value of $10,000, determine the depreciation expense in the current year using ...

This assignment will assess the following learning

This assignment will assess the following learning outcomes: - Demonstrate the impact on the financial statements and the implication for different users of accounts of alternative ways of treating controversial accounti ...

Accountinguse the internet to research an annual report of

Accounting Use the Internet to research an annual report of a retail company. • Then, imagine you are an investor or creditor; suggest the ratios that you believe would provide an investor or creditor with the most impor ...

Brief exercise 17-3carow corporation purchased as a

Brief Exercise 17-3 Carow Corporation purchased, as a held-to-maturity investment, $70,500 of the 10%, 7-year bonds of Harrison, Inc. for $77,947, which provides a 8% return. The bonds pay interest semiannually. Prepare ...

The trial balance before adjustment for sheffield company

The trial balance before adjustment for Sheffield Company shows the following balances.   Dr. Cr. Accounts Receivable $84,800 Allowance for Doubtful Accounts 2,420 Sales Revenue   $434,200 Using the data above, give the ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen