Reference no: EM132745479
Question - Intercompany shareholdings of an affiliated group during the year ended December 31, Year 2, were as follows:
York Ltd.
90% of Queen's Company
80% of McGill Company
Queen's Company
70% of Carleton Ltd.
10% of McGill Company
McGill Company
60% of Trent Ltd.
The equity method is being used for intercompany investments, but no entries have been made in Year 2. The profits before equity method earnings for Year 2 were as follows:
Profit
York Ltd. 54,000
Queen's Company 22,000
McGill Company 26,700
Carleton Ltd. 15,400
Trent Ltd. 11,600
Intercompany profits before taxes in the December 31, Year 2, inventories and the selling companies were as follows:
Selling Corporation Profit Made by Selling Corporation
York Ltd. 10,000
McGill Company 1,000
Carleton Ltd. 2,400
Use income tax allocation at a 40% rate. Assume that there is no acquisition differential for any of the inter-company shareholdings.
Required -
(a) Calculate consolidated profit attributable to York's shareholders for Year 2.
(b) Calculate the amount of consolidated profit attributable to non-controlling interest that would appear on the Year 2 consolidated income statement.
(c) Will the consolidation adjustment for unrealized profits be any different if McGill Company sells inventory to Carleton Ltd. or York Ltd.? Use the revenue recognition principle to explain your answer.
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