# Preparing a consolidated income statement—Cost method with noncontrolling interest, AAP and upstream and downstream intercompany inventory...

###### Question:

Preparing a consolidated income statement—Cost method with noncontrolling interest, AAP and upstream and downstream intercompany inventory profits A parent company purchased a 70% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $300,000 in excess of the subsidiary’s Stockholders’ Equity on the acquisition date. This excess was assigned to a building that was estimated to be undervalued by$180,000 and to an unrecorded Trademark valued at $120,000. The building asset is being depreciated over a 10-year period and the Trademark is being amortized over a 6-year period, both on the straight-line basis with no salvage value. During the current year, the parent and subsidiary reported a total of$400,000 of intercompany sales. At the beginning of the current year, there were $70,000 of upstream intercompany profits in the parent’s inventory. At the end of the current year, there were$50,000 of downstream intercompany profits in the subsidiary’s inventory. During the current year, the subsidiary declared and paid $100,000 of dividends. The parent company uses the cost method of pre-consolidation investment bookkeeping. Each company reports the following income statement for the current year: Parent Subsidiary Income statement: Sales$12,000,000 $1,300,000 Cost of goods sold (7,000,000) (650,000) Gross profit 5,000,000 650,000 Income (loss) from subsidiary 70,000 - Operating expenses (2,500,000) (370,000) Net income$2,570,000 $280,000 a. Starting with the parent’s current-year pre-consolidation net income of$2,570,000, compute the amount of current-year net income attributable to the parent that will be reported in the consolidated financial statements.

b. Prepare the consolidated income statement for the current year.

I need help with part B

Reconciliation of Cost to Equity Method Parent's pre-consolidation net income $2,570,000 Dividend Income 70,000 P% x Net income of subsidiary 196,000 P96 x AAP amortization 26,600 P% of Upstream profit 49,000 Downstream profit 50,000 Net income attributable to controlling interest$ 2,668,400
Consolidated Income Statement Sales $Cost of goods sold Gross profit Operating expenses Net income Net income attributable to noncontrolling interests Net income attributable to the parent ✓$ 12,400,000 X 7,100,000 X 5,300,000 X 2.908,000 2,392,000 x 291,400 X 2,683,400 x ►

#### Similar Solved Questions

##### What are the three ways in which Natural Language Process (NLP) could be used in healthcare?
what are the three ways in which Natural Language Process (NLP) could be used in healthcare?...
##### 1. There has been a trend in recent years for companies to outsource their IT function....
1. There has been a trend in recent years for companies to outsource their IT function. What effect does this have on IT internal controls? How does management and the auditor get comfortable with internal controls when functions are outsourced? 2. Many companies are now outsourcing their internal a...
##### 2. Using Table 3-3, please provide the calculations below by assuming: (a) cholera was a chronic...
2. Using Table 3-3, please provide the calculations below by assuming: (a) cholera was a chronic illness; (b) the reported numbers for each year are newly diagnosed cases; and (c) that no death occurred during that time in the population of 1000. • Calculate incidence for cholera in 2013 •...
##### What screening interventions are used for adults at risk for chronic diseases?
What screening interventions are used for adults at risk for chronic diseases?...
##### Page 1 Synthesis using Carbonyl O-Substitution Chemistry Preamble This experiment involves the synthesis of target molecules...
Page 1 Synthesis using Carbonyl O-Substitution Chemistry Preamble This experiment involves the synthesis of target molecules using a-substitution chemistry. You are assigned two target molecules, one of which is best synthesized by an alkylation approach, while the other is best synthesized by an ad...
##### 1. A hollow conducting sphere of radius R has a charge Q placed on its surface....
1. A hollow conducting sphere of radius R has a charge Q placed on its surface. A point charge Q1 is placed at a distance d> R from the center of the sphere. a) Using the method of superposition, find a combination of two image charges inside the sphere that result in the correct electric field a...
##### 4. (12 pts) A buffer is created by mixing 50.0 mL of 0.50 M C6H5N and...
4. (12 pts) A buffer is created by mixing 50.0 mL of 0.50 M C6H5N and 40.0 mL of 1.0M HC.HSNCI. What is the final pH of the solution if 20.0 mL of 0.50 M KOH is added to the buffer at 25 °C? K(C6H5N) - 1.4 x 10-9 To receive full credit, all work must be explicitly shown, including the relevant n...
##### What is the Laplace transform of: f(t)=-8sin(6t)+9H(t-27)cos(6t)? Your answer should be expressed as a function of...
What is the Laplace transform of: f(t)=-8sin(6t)+9H(t-27)cos(6t)? Your answer should be expressed as a function of s using the correct syntax. Note that the correct syntax for it is Pi. For example: (2-3*exp(-Pi*s)/(s^2+1) Laplace transform is F(s) = Skipped...
##### A standardized test has a mean score of 64 with a standard deviation of 6 what percentage of students score higher than 70 on the standardized test
A standardized test has a mean score of 64 with a standard deviation of 6 what percentage of students score higher than 70 on the standardized test? what percentage of students score higher then 76 on the standardized test? What percentge of students score lower than 58?...
##### Netflix, Inc. (unaudited) Consolidated Balance Sheets, in thousands December 31, December 31, 2018 2019 Assets 3,794,483...
Netflix, Inc. (unaudited) Consolidated Balance Sheets, in thousands December 31, December 31, 2018 2019 Assets 3,794,483 5,018,437 Current assets: Cash and cash equivalents Short-term investments Current content assets, net Other current assets Total current assets Non-current content assets, net* P...
##### Hint of HW2: 4. Let X = (X1, ..., Xn) be an i.i.d. sample from the...
Hint of HW2: 4. Let X = (X1, ..., Xn) be an i.i.d. sample from the shifted exponential distri- bution with density fa,1(x) = de-1(z–a) 1(x > a), 0 := (a, 1) E O = R (0,00). Use Neyman-Fisher's theorem to: (a) show that S = X(1) is an SS for the family {fa,1}QER; (b) find an SS for the ...
##### If a bee stings you what happens internally
if a bee stings you what happens internally...
##### The determination of prices in the market for automobiles is primarily a concern of positive economics....
The determination of prices in the market for automobiles is primarily a concern of positive economics. normative economics microeconomics. macroeconomics. Question 11 (1 point) Scarcity would cease to exist as an economic problem if we learned to cooperate and not compete with each other there were...
##### DISCUSSION 11[14.1 and 14.2]: ANSWER QUESTION 5 AND ANY 2 OTHERS [INITIAL POST DUE THURSDAY 12/3...
DISCUSSION 11[14.1 and 14.2]: ANSWER QUESTION 5 AND ANY 2 OTHERS [INITIAL POST DUE THURSDAY 12/3 AT 8 AM] Show all work for full credits. NAME 1. A senate subcommittee consists of nine Democrats and eight Republicans. In how ways can a chairman, vice chairman, and a secretary be chosen if the chairm...
##### To partially overcome the US current account deficit, the Trump Administration neds to attract FDI that...
To partially overcome the US current account deficit, the Trump Administration neds to attract FDI that could spur the nation's gross domestc prodtuct (GD growth rate. Based on the chapter material, what policy measures should the Trump Administration take to keep attracting FDI into the country...