Reference no: EM13227296
1. Pot Co. holds 90% of the common stock of Skillet Co. During 2011, Pot reportedsales of $1,120,000 and cost of goods sold of $840,000. For this same period,Skillet had sales of $420,000 and cost of goods sold of $252,000.Included in the amounts for Skillet's sales were Skillet's sales ofmerchandise to Pot for $140,000. There were no sales from Pot to Skillet.Intra-entity sales had the same markup as sales to outsiders. Pot still had40% of the intra-entity sales as inventory at the end of 2011. What areconsolidated sales and cost of goods sold for 2011?
2. Pepe, Incorporated acquired 60% of Devin Company on January 1, 2010. On thatdate Devin sold equipment to Pepe for $45,000. The equipment had a cost of$120,000 and accumulated depreciation of $66,000 with a remaining life of 9years. Devin reported net income of $300,000 and $325,000 for 2010 and 2011,respectively. Pepe uses the equity method to account for its investment inDevin.
3. Edgar Co. acquired 60% of Stendall Co. on January 1, 2011. During 2011, Edgarmade several sales of inventory to Stendall. The cost and selling price of thegoods were $140,000 and $200,000, respectively. Stendall still owned
one-fourth of the goods at the end of 2011. Consolidated cost of goods soldfor 2011 was $2,140,000 because of a consolidating adjustment for intra-entitysales less the entire profit remaining in Stendall's ending inventory.How would non-controlling interest in net income have differed if thetransfers had been for the same amount and cost, but from Stendall to Edgar?
4. On January 1, 2010, Smeder Company, an 80% owned subsidiary of Collins, Inc.,transferred equipment with a 10-year life (six of which remain with no salvagevalue) to Collins in exchange for $84,000 cash. At the date of transfer,
Smeder's records carried the equipment at a cost of $120,000 less accumulateddepreciation of $48,000. Straight-line depreciation is used. Smeder reportednet income of $28,000 and $32,000 for 2010 and 2011, respectively. All netincome effects of the intra-entity transfer are attributed to the seller forconsolidation purposes. What is the net effect on consolidated net income in2010 due to the equipment transfer?