Ask Question, Ask an Expert


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

Qestion 1beginning inventory24 tires 61purchase6 tires

QUESTION 1. Beginning inventory........24 tires @ $61 Purchase.........6 tires @ $76 Sale.......17 tires @ $105 Requirements 1. Compute cost of goods sold and gross profit under FIFO. 2. Compute cost of goods sold and gr ...

The sanford company had the following balance sheet as of

The Sanford Company had the following balance sheet as of December 31, 20x2. The transactions for the first three months of 20x3 are also presented along with other information about specific accounts. Sanford Company Ba ...

Assessment - written report - individual assessment purpose

Assessment - Written Report - individual assessment Purpose: This assessment is designed to reinforce the subject content and develop students' skills and application of knowledge of the subject content to business situa ...

Accounting assignmenttransfer pricing decisionsas a manager

Accounting Assignment Transfer Pricing Decisions As a manager, you may be tasked with making recommendations as to how your organization should structure its transfer pricing. This is especially true in cases when both v ...

Assignment- fraud in the accounting information systemfor

Assignment- Fraud in the Accounting Information System For this assignment, research the Internet or Strayer databases to locate a firm that was involved in a fraud and / or embezzlement case. Explain how the firm's acco ...

Task1 create journal entries for the following

Task: 1. Create journal entries for the following transactions. 2. Draw up a T-accounts for each account affected by transactions. 3. Calculate ending balances for all T-accounts. Transactions: March, 1: Student Corp. re ...

1 which of the following statements about equity is

1. Which of the following statements about equity is correct? A. If equity is negative, debt exceeds total assets B. If equity is negative, total assets exceed debt C. If equity is negative, equity exceeds assets D. If e ...

Guidelines for literature critiquesstudents are require to

Guidelines for Literature Critiques Students are require to read and understand assigned article. Students must submit a critique of assigned academic article. Please follow the format to complete your assignment. Detail ...

Module 1 1 page topic selectionselect any topic in

Module 1 ( 1 Page ) Topic Selection Select any topic in accounting of interest that connects to the subject matter of this course. If you have already selected the area of your doctoral research, you may choose a topic i ...

Discussionsustainable income and ratio analysis please

Discussion "Sustainable Income and Ratio Analysis" Please respond to the following: • Describe sustainable income and the importance of sustainable income in the evaluation of the income statement. Choose at least two it ...

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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