60.1K

Verified Solution

Link Copied!

Placid Lake Corporation acquired 80 percent of the outstanding voting stock of Scenic, Inc, on January 1, 2020, when Scenic had a net book value of $420,000. Any excess fair value was assigned to intangible assets and amortized at a rate of $5,000 per year. Placid Lake's 2021 net income before consideration of its relationship with Scenic (and before adjustments for intra-entity sales) was $320,000. Scenic reported net income of $130,000. Placid Lake declared $120,000 in dividends during this period; Scenic paid $42,000. At the end of 2021 , selected figures from the two companies' balance sheets were as follows: During 2020, intra-entity sales of $85,000 (original cost of $46,000 ) were made. Only 20 percent of this inventory was still held within the consolidated entity at the end of 2020 . In 2021,$110,000 in intra-entity sales were made with an original cost of $61,000. Of this merchandise, 30 percent had not been resold to outside parties by the end of the year. Each of the following questions should be considered as an independent situation for the yoar 2021. a. What is consolidated net income for Placid Lake ond its subsidiary? b. If the intra-entity tales were upstream, how would consolidated net income be allocated to the controlling and noncontrolling interest? c. If the intra-entity sales were downstream, how would consolidated net income be allocated to the controlling and noncontroling Interest? d. What is the consolidated balance in the ending Inventory account? e. Assume that no intra-entity inventory sales occurred between Placid Lake and Scenic. instead, in 2020, Scenic soid land costing $32,000 to Placid Lake for $54,000. On the 2021 consolidated balance sheet, what value should be reported for land? 1-1. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2020, Scenic sold equipment (that originally cost $120,000 but had a $62,000 book value on that date) to Placid Lake for $84,000. At the time of sale, the equipment had a remaining useful tife of five years. What worksheet entries are made for a December 31 . 2021 . consolidation of these two companies to eliminate the impact of the intra-entify transfer? 50 d equipment (that originally cost $120,000 but had a $62,000 book value on that date) to Placid Lake for $84,000. At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December 31,2021 . consolidation of these two componies to climinate the impoct of the intra-entity transfer? 1.2. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1 , 2020 Scenic. sold equipment (that origlnally cost $120,000 but had a $62,000 book value on thot date) to Placid Lake for $84,000; At the time of sale, the equlpment had a remaining useful life of five years. For 2021 , what is the noncontroling interest's share of Seenic's net Complete this question by entering your answers in the tabs below. What is consolidated net income for Placid Lake and its subsidiary? b. If the intra-entity sales were upstream, how would consolidated net income be allocated to the controlling and noncontrolling interest? c. If the intra-entity sales were downstream, how would consolidated net income be allocated to the controlling and noncontrolling interest? Complete this question by entering your answers in the tabs below. d. What is the consolidated balance in the ending Inventory account? e. Assume that no intra-entity inventory sales occurred between Placid Lake and Scenic. Instead, in 2020, Scenic sold isnd costing $32,000 to Piacld Lake for $54,000. On the 2021 consolidated balance sheet, what value should be reported for land? Assume that no intra-entity inventory or land sales occurred between Procid Lake and Scenic. Instead, on January 1, 2020 , Scenic sold equipment (that originally cost $120,000 but had a $62,000 book value on that date) to 2 lacld Lake for $84,000 At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December 31,2021 , consolidation of these two companies to eliminate the impoct of the intro-entity transfer? (If no shtry is required for a transection/event, select "No journal entry required in the first account field, Complete this question by entering your answers in the tabs below. Assume that no intra-entity inventory or land sales occurred between Placid Lake and Scenic. Instead, on January 1, 2020, 5 cenic sold equipment (that originally cost $120,000 but had a $62,000 book value on that date) to Placid Lake for $84,000. At the time of sale, the equipment had a remaining useful life of five years. For 2021 , what is the noncontrolling interest's share of Scenic's nat income

Answer & Explanation Solved by verified expert

See Answer