Prepare intercompany profit analysis schedule to show

Assignment Help Financial Accounting

Reference no: EM132757900

On January 1, 2021 P Co acquired 60% ownership of S Ltd. On the acquisition date all identifiable assets and liabilities had book values equal to fair values. P uses the cost method to record its investment in S. For external reporting purposes consolidated statements are required. However, the purchase did result in the acquisition of goodwill of $55,000.

During the past few years, a number of transactions have taken place:

1) Inter-company downstream sales during 2025 were 200,000. An unrealized profit of 18,000 still remains in the unsold ending inventory. The beginning inventory included an unrealized profit of 9,000 related to last year's downstream inter-company sales.

2) Inter-company upstream sales during 2025 were 70,000. An unrealized profit of 8,000 remains in the unsold ending inventory. There were no inter-company upstream sales last year.

3) On January 3, 2023, P sold equipment to S for 100,000. The equipment had a net book value of $75,000 and a remaining useful life of 10 years on the date of sale.

4) On July 8, 2025, S sold land to P for $167,000. The land had a book value of $155,000. The land remained within the consolidated entity for the entire 2025 year.

5) Goodwill impairment for 2025 was 5,500.

6) The following financial information is available for the year ending Dec 31, 2025:

Net Income

P=125000
S=62,000
Dividends Paid
P=25,000
S=10,000

Required

Problem 1. Prepare intercompany profit analysis schedule 2025 to show before tax, tax and after-tax impacts of intercompany inventory, land and equipment sales.

Problem 2. Use your schedule in part 1 above to calculate consolidated net income for 2025. Show attribution to both shareholder groups.

Reference no: EM132757900

Questions Cloud

How do determine the maximum loss that can be absorbed : Determine the maximum loss that can be absorbed in Step 1. Then, assuming that this loss has been incurred, determine the next maximum loss

Determine the composite camels : Based on the CAMELS Composite rating would regulators consider this bank to be a "problem" bank? Why or why not?

Net interest income and net interest margin : How much will Net Interest Income and Net Interest Margin change if interest rates fall by 200 basis points?

Find the amount of interest in an account paying : Find the amount of interest for $3000 in an account paying simple interest of 5% for 2 years. Find amount of interest for $3000 in an account paying 5% interest

Prepare intercompany profit analysis schedule to show : Prepare intercompany profit analysis schedule 2025 to show before tax, tax and after-tax impacts of intercompany inventory, land and equipment sales

Business overview for new planning team members : As member of Harley-Davidson's strategic planning team, Create five- to six-slide Microsoft PowerPoint presentation titled "Harley-Davidson.

Calculate the one- to five-year interest rates : Using the liquidity premium theory, calculate the one- to five-year interest rates and plot the resulting yield curve.

What type of loan requires a promissory note : What type of loan requires a promissory note and security agreement?

Internal or external pressure that caused the change : What was the internal or external pressure that caused the change? What organizational changes resulted from the pressure for change?

User Account

All Pages