La paz sistémico-compleja a través de la Carta de la Tierra

E. Noncontrolling interest in subsidiary's net income is increased by an upstream gain in the year of transfer.

AACSB: Reflective thinking AICPA FN: Measurement Bloom's: Knowledge Difficulty: Easy

Learning Objective: 05-05 Understand the difference between upstream and downstream intra-entity transfers and how each affects the computation of noncontrolling interest balances.

Learning Objective: 05-07 Prepare the consolidation entries to remove the effects of upstream and downstream intra-entity fixed asset transfers across affiliated entities.

Gargiulo Company, a 90% owned subsidiary of Posito Corporation, sells inventory to Posito at a 25% profit on selling price. The following data are available pertaining to intra-entity purchases. Gargiulo was acquired on January 1, 2010.

Assume the equity method is used. The following data are available pertaining to Gargiulo's income and dividends.

50. Compute the equity in earnings of Gargiulo reported on Posito's books for 2010.

A. $63,000.

B. $62,730.

C. $63,270.

D. $70,000.

E. $62,700.

AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-03 Prepare the consolidation entry to eliminate any intraentity inventory gross profit that remains unrealized at (a) the end of the year of transfer and (b) the beginning of the subsequent period.

Learning Objective: 05-05 Understand the difference between upstream and downstream intra-entity transfers and how each affects the computation of noncontrolling interest balances.

51. Compute the equity in earnings of Gargiulo reported on Posito's books for 2011.

A. $76,500.

B. $77,130.

C. $75,870.

D. $75,600.

E. $75,800.

AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-04 Understand that the consolidation process for inventory transfers is designed to defer the unrealized portion of an intra-entity gross profit from the year of transfer into the year of disposal or consumption.

Learning Objective: 05-05 Understand the difference between upstream and downstream intra-entity transfers and how each affects the computation of noncontrolling interest balances.

52. Compute the equity in earnings of Gargiulo reported on Posito's books for 2012.

A. $84,600.

B. $84,375.

C. $83,925.

D. $84,825.

E. $84,850.

AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-04 Understand that the consolidation process for inventory transfers is designed to defer the unrealized portion of an intra-entity gross profit from the year of transfer into the year of disposal or consumption.

Learning Objective: 05-05 Understand the difference between upstream and downstream intra-entity transfers and how each affects the computation of noncontrolling interest balances.

53. Compute the noncontrolling interest in Gargiulo's net income for 2010.

A. $6,970.

B. $7,000.

C. $7,030.

D. $6,270.

E. $6,230.

AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-03 Prepare the consolidation entry to eliminate any intraentity inventory gross profit that remains unrealized at (a) the end of the year of transfer and (b) the beginning of the subsequent period.

Learning Objective: 05-05 Understand the difference between upstream and downstream intra-entity transfers and how each affects the computation of noncontrolling interest balances.

54. Compute the noncontrolling interest in Gargiulo's net income for 2011.

A. $8,500.

B. $8,570.

C. $8,430.

D. $8,400.

E. $7,580.

AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-04 Understand that the consolidation process for inventory transfers is designed to defer the unrealized portion of an intra-entity gross profit from the year of transfer into the year of disposal or consumption.

Learning Objective: 05-05 Understand the difference between upstream and downstream intra-entity transfers and how each affects the computation of noncontrolling interest balances.

55. Compute the noncontrolling interest in Gargiulo's net income for 2012.

A. $9,400.

B. $9,375.

C. $9,425.

D. $9,325.

E. $8,485.

AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-04 Understand that the consolidation process for inventory transfers is designed to defer the unrealized portion of an intra-entity gross profit from the year of transfer into the year of disposal or consumption.

Learning Objective: 05-05 Understand the difference between upstream and downstream intra-entity transfers and how each affects the computation of noncontrolling interest balances.

56. For consolidation purposes, what amount would be debited to cost of goods sold for the 2010 consolidation worksheet with regard to unrealized gross profit of the intra-entity transfer of merchandise?

A. $300.

B. $240.

C. $2,000.

D. $1,600.

E. $270.

AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium

Learning Objective: 05-03 Prepare the consolidation entry to eliminate any intraentity inventory gross profit that remains unrealized at (a) the end of the year of transfer and (b) the beginning of the subsequent period.

57. For consolidation purposes, what amount would be debited to cost of goods sold for the 2011 consolidation worksheet with regard to the unrealized gross profit of the 2011 intra-entity transfer of merchandise?

A. $1,000.

B. $800.

C. $3,000.

D. $2,400.

E. $900.

AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium

Learning Objective: 05-03 Prepare the consolidation entry to eliminate any intraentity inventory gross profit that remains unrealized at (a) the end of the year of transfer and (b) the beginning of the subsequent period.

58. For consolidation purposes, what amount would be debited to cost of goods sold for the 2012 consolidation worksheet with regard to the unrealized gross profit of the 2012 intra-entity transfer of merchandise?

A. $600.

B. $750.

C. $3,760.

D. $3,000.

E. $675.

AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium

Learning Objective: 05-03 Prepare the consolidation entry to eliminate any intraentity inventory gross profit that remains unrealized at (a) the end of the year of transfer and (b) the beginning of the subsequent period.

59. For consolidation purposes, what amount would be debited to January 1 retained earnings for the 2010 consolidation worksheet entry with regard to the unrealized gross profit of the 2010 intra-entity transfer of merchandise?

A. $0.

B. $1,600.

C. $300.

D. $240.

E. $270.

AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium

Learning Objective: 05-04 Understand that the consolidation process for inventory transfers is designed to defer the unrealized portion of an intra-entity gross profit from the year of transfer into the year of disposal or consumption.

60. For consolidation purposes, what amount would be debited to January 1 retained earnings for the 2011 consolidation worksheet entry with regard to the unrealized gross profit of the 2010 intra-entity transfer of merchandise?

A. $240.

B. $300.

C. $2,000.

D. $1,600.

E. $270.

AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium

Learning Objective: 05-04 Understand that the consolidation process for inventory transfers is designed to defer the unrealized portion of an intra-entity gross profit from the year of transfer into the year of disposal or consumption.

61. For consolidation purposes, what amount would be debited to January 1 retained earnings for the 2012 consolidation worksheet entry with regard to the unrealized gross profit of the 2011 intra-entity transfer of merchandise?

A. $3,000.

B. $2,400.

C. $1,000.

D. $800.

E. $900.

AACSB: Analytic AICPA FN: Measurement Bloom's: Analysis Difficulty: Medium

Learning Objective: 05-04 Understand that the consolidation process for inventory transfers is designed to defer the unrealized portion of an intra-entity gross profit from the year of transfer into the year of disposal or consumption.

Patti Company owns 80% of the common stock of Shannon, Inc. In the current year, Patti reports sales of $10,000,000 and cost of goods sold of $7,500,000. For the same period, Shannon has sales of $200,000 and cost of goods sold of $160,000. During the year, Patti sold merchandise to Shannon for $60,000 at a price based on the normal markup. At the end of the year, Shannon still possesses 30 percent of this inventory.

62. Compute consolidated sales. AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-02 Prepare the consolidation entry to eliminate the sales and purchases balances that are created by the intraentity transfer of inventory.

63. Compute consolidated cost of goods sold.

A. $7,500,000. AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-02 Prepare the consolidation entry to eliminate the sales and purchases balances that are created by the intraentity transfer of inventory.

Learning Objective: 05-03 Prepare the consolidation entry to eliminate any intraentity inventory gross profit that remains unrealized at (a) the end of the year of transfer and (b) the beginning of the subsequent period.

64. Assume the same information, except Shannon sold inventory to Patti. Compute consolidated sales.

A. $10,000,000. AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Wilson owned equipment with an estimated life of 10 years when it was acquired for an original cost of $80,000. The equipment had a book value of $50,000 at January 1, 2010. On January 1, 2010, Wilson realized that the useful life of the equipment was longer than originally anticipated, at ten remaining years.

On April 1, 2010 Simon Company, a 90% owned subsidiary of Wilson Company, bought the equipment from Wilson for $68,250 and for depreciation purposes used the estimated

remaining life as of that date. The following data are available pertaining to Simon's income and dividends:

65. Compute the gain on transfer of equipment reported by Wilson for 2010.

A. $19,500. AICPA FN: Measurement Bloom's: Application Difficulty: Hard

Learning Objective: 05-07 Prepare the consolidation entries to remove the effects of upstream and downstream intra-entity fixed asset transfers across affiliated entities.

66. Compute the amortization of gain through a depreciation adjustment for 2010 for consolidation purposes.

A. $1,950. AICPA FN: Measurement Bloom's: Application Difficulty: Hard

Learning Objective: 05-07 Prepare the consolidation entries to remove the effects of upstream and downstream intra-entity fixed asset transfers across affiliated entities.

67. Compute the amortization of gain through a depreciation adjustment for 2011 for consolidation purposes.

A. $1,950. AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-07 Prepare the consolidation entries to remove the effects of upstream and downstream intra-entity fixed asset transfers across affiliated entities.

68. Compute the amortization of gain through a depreciation adjustment for 2012 for consolidation purposes.

A. $1,925. AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-07 Prepare the consolidation entries to remove the effects of upstream and downstream intra-entity fixed asset transfers across affiliated entities.

69. Compute Wilson's share of income from Simon for consolidation for 2010.

A. $72,000. AICPA FN: Measurement Bloom's: Application Difficulty: Medium

70. Compute Wilson's share of income from Simon for consolidation for 2011.

A. $108,000.

B. $110,000.

C. $106,000.

D. $109,825.

E. $109,800.

AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-07 Prepare the consolidation entries to remove the effects of upstream and downstream intra-entity fixed asset transfers across affiliated entities.

71. Compute Wilson's share of income from Simon for consolidation for 2012.

A. $118,825.

B. $115,000.

C. $117,000.

D. $119,000.

E. $118,800.

AACSB: Analytic AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-07 Prepare the consolidation entries to remove the effects of upstream and downstream intra-entity fixed asset transfers across affiliated entities.

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 salvage value) 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 accumulated depreciation of $48,000. Straight-line depreciation is used. Smeder reported net income of $28,000 and $32,000 for 2010 and 2011, respectively.

All net income effects of the intra-entity transfer are attributed to the seller for consolidation purposes.

72. Compute the gain recognized by Smeder Company relating to the equipment for 2010. AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-07 Prepare the consolidation entries to remove the effects of upstream and downstream intra-entity fixed asset transfers across affiliated entities.

73. Compute Collins' share of Smeder's net income for 2010.

A. $12,400. AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-07 Prepare the consolidation entries to remove the effects of upstream and downstream intra-entity fixed asset transfers across affiliated entities.

74. Compute Collins' share of Smeder's net income for 2011.

A. $27,600. AICPA FN: Measurement Bloom's: Application Difficulty: Medium

Learning Objective: 05-07 Prepare the consolidation entries to remove the effects of upstream and downstream intra-entity fixed asset transfers across affiliated entities.

75. For consolidation purposes, what net debit or credit will be made for the year 2010 relating to the accumulated depreciation for the equipment transfer?

A. Debit accumulated depreciation, $46,000.

B. Debit accumulated depreciation, $48,000.

C. Credit accumulated depreciation, $48,000.

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