On january 1 2016 parent company acquired 80 of the common


On January 1, 2016, Parent Company acquired 80% of the common stock of Subsidiary Company.

On December 31, 2016, Parent held merchandise acquired from Subsidiary for $30,000. During 2016, Subsidiary sold merchandise to Parent for $150,000 at a gross profit ratio of 30%.

?On December 31, 2016, Parent still owes Subsidiary $15,000 for merchandise acquired during 2016.

On December 31, 2017, Parent held merchandise acquired from Subsidiary for $40,000. During 2017, Subsidiary sold merchandise to Parent for $180,000 at a gross profit ratio of 30%.

On December 31, 2017, Parent still owes Subsidiary $20,000 for merchandise acquired during 2017.

?On January 1, 2016, Parent sold to Subsidiary some equipment with a cost of $60,000 and a book value of $40,000. The sales price was $50,000. Subsidiary is depreciating the acquired equipment over a remaining five-year life, assuming no salvage value and using the straight-line method.

Required:

?Prepare the worksheet eliminations that would be made on the 2016 consolidated worksheet as a result of:

?1) the intercompany sale of inventory

?2) the intercompany sale of equipment

Required:

Prepare the worksheet eliminations that would be made on the 2017 consolidated worksheet as a result of:

1) the intercompany sale of inventory

?2) the intercompany sale of equipment

Problem 2

Using the information given for problem 1 and assuming that the sub reports income for 2016 of $200,000 and for 2017 of $300,000 what is the NCI share of consolidated income for (any impact from the A or D elimination entries can be ignored)

1) 2016

?2) 2017

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Financial Accounting: On january 1 2016 parent company acquired 80 of the common
Reference No:- TGS01667246

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