Reference no: EM132518587

Yosef Corporation acquired 90% of the outstanding voting stock of Randeep Inc. on January 1, Year 6. During Year 6, intercompany sales of inventory of $45,000 (original cost of $27,000) were made. Only 20% of this inventory was still held within the consolidated entity at the end of Year 6 and was sold in Year 7. Intercompany sales of inventory of $60,000 (original cost of $33,000) occurred in Year 7. Of this merchandise, 30% had not been resold to outside parties by the end of the year.

At the end of Year 7, selected figures from the two companies' financial statements were as follows:

                                                          Yosef                            Randeep

Inventory                                 $70,000                    $45,000

Retained Earning, beg. of year      500,000                   300,000

Net Income                                150,000                    55,000

Dividends Declared                        50,000                    20,000

Retained Earnings, End of Year         600,000                335,000

Yosef uses the cost method to account for its investment in Randeep. Both companies pay income tax at the rate of 40%.

Required:

Assume that all intercompany sales were upstream. Calculate the amount to be reported on the Year 7 consolidated financial statements for the following accounts/items:

Question (i) Consolidated net income

Question (ii) Consolidated net income attributable to the controlling and non-controlling interest

Question (iii) Deferred income tax asset

Question (iv) Inventory

Question (v) Assume Randeep's retained earnings at acquisition date January 1, Year 6 was $140,000. Calculate the Parent's (Yosef's) consolidated retained earnings balance at January 1, year 7 AND December 31, year 7.