The following balances were taken from the records of S Company: P Company owns 80% of the common stock of S Company. During 2017, P Company purchased merchandise from S Company for $4,000,000. S Company sells merchandise to P Company at cost plus 25% of cost. On December 31, 2017, merchandise purchased from S Company for $1,250,000 remains in the inventory of P Company. On January 1, 2017, P Company's inventory contained merchandise purchased from S Company for $525,000. The affiliated companies file a consolidated income tax return. There was no difference between the implied value and the book value of net assets acquired.
Required:
A. Prepare all workpaper entries necessitated by the intercompany sales of merchandise.
B. Compute noncontrolling interest in consolidated income for 2017.
C. Compute noncontrolling interest in consolidated net assets on December 31, 2017.

Question

The following balances were taken from the records of S Company:  P Company owns 80% of the common stock of S Company. During 2017, P Company purchased merchandise from S Company for $4,000,000. S Company sells merchandise to P Company at cost plus 25% of cost. On December 31, 2017, merchandise purchased from S Company for $1,250,000 remains in the inventory of P Company. On January 1, 2017, P Company's inventory contained merchandise purchased from S Company for $525,000. The affiliated companies file a consolidated income tax return. There was no difference between the implied value and the book value of net assets acquired.
Required:
A. Prepare all workpaper entries necessitated by the intercompany sales of merchandise.
B. Compute noncontrolling interest in consolidated income for 2017.
C. Compute noncontrolling interest in consolidated net assets on December 31, 2017.

Quizplus · Accepted Answer

The Answer of The following balances were taken from the records of S Company:  P Company owns 80% of the common stock of S Company. During 2017, P Company purchased merchandise from S Company for $4,000,000. S Company sells merchandise to P Company at cost plus 25% of cost. On December 31, 2017, merchandise purchased from S Company for $1,250,000 remains in the inventory of P Company. On January 1, 2017, P Company's inventory contained merchandise purchased from S Company for $525,000. The affiliated companies file a consolidated income tax return. There was no difference between the implied value and the book value of net assets acquired.
Required:
A. Prepare all workpaper entries necessitated by the intercompany sales of merchandise.
B. Compute noncontrolling interest in consolidated income for 2017.
C. Compute noncontrolling interest in consolidated net assets on December 31, 2017.

The Following Balances Were Taken from the Records of S