Compute the amount to be reported as cost of goods sold in the 20X5 consolidated
ID: 2541117 • Letter: C
Question
Compute the amount to be reported as cost of goods sold in the 20X5 consolidated income statement.
What amount of income will be assigned to the noncontrolling shareholders in the 20X5 consolidated income statement?
What amount of income will be assigned to the controlling interest in the 20X5 consolidated income statement?
Compute the amount to be reported as cost of goods sold in the 20X5 consolidated income statement.
What amount of income will be assigned to the noncontrolling shareholders in the 20X5 consolidated income statement?
What amount of income will be assigned to the controlling interest in the 20X5 consolidated income statement?
Prem Company acquired 60 percent ownership of Cooper Company's voting shares on January 1, 20X2. During 20X5, Prem purchased inventory for $20,000 and sold the full amount to Cooper Company for $30,000. On December 31, 20X5, Cooper's ending inventory included $6,000 of items purchased from Prem. Also in 20X5, Cooper purchased inventory for $58,000 and sold the units to Prem for $88,000. Prem included $22,000 of its purchase from Cooper in ending inventory on December 31, 20X5. Summary income statement data for the two companies revealed thefollowing: Company $ 356,400 $ 230,000 Prem Company Sales Income from Cooper 42,100 $ 398,500 230,000 Cost of Goods Sold $ 240,000 $ 118,000 Other Expenses Total Expenses Net Income 0,00031,000 $ (290,000) $(149,000) $ 108,500 $ 81,000Explanation / Answer
a) Reported Sales of prem company 356400 Reported Sales of Cooper company 230000 586400 Inter company sale by prem company in 20X5 30000 Inter company sale by cooper company in 20X5 88000 -118000 Sales reported on consolidated income statement 468400 b) Cost of Goods sold reported by Prem Company 240000 Cost of Goods sold reported by Cooper Company 118000 358000 Adjustment due to intercompany sales Consolidated cost of goods sold Adjustment to cost of goods sold: CGS charged by prem on sale to cooper 22000 CGS charged by Cooper (30000-6000 ) 24000 Total charged to GGS 46000 CGS for consolidated entity $22000 * (24000 / 30000) -17600 Required adjustment to CGS 28400 CGS charged by cooper on sale to prem 58000 CGS charged by Prem (88000 - 22000) 60000 Total charged to CGS 118000 CGS for consolidated entity $ 58000 * (60000 / 88000) -39545.5 Required adjustment to CGS 78454.55 Total adjustment required 106854.5 c) Reported net income of cooper company 81000 unrealized profit on sale to prem company $30000 * ($22000 / 88000) -7500 Realized net income 73500 Non controlling interest's share X 0.40 Income assigned to non controlling interest 29400 d) Reported net income of prem company 108500 Less: income from subsidiary -48600 59900 Net income of cooper company 81000 Operating income 140900 Less- Unrealised inventory profit of prem Company [ $10000 * ($6000 / $30000)] $ 2000 unrealized inventory profit of cooper Company [$30000 * ($22000 / $88000) ] $ 7500 Income assigned to non controlling interest 29400 -38900 Income assigned to controlling interst 102000
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