advanced accounting

On January 1, 2017, 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 2017 and 2018, respectively. All net income effects of the intra-entity transfer are attributed to the seller for consolidation purposes. For consolidation purposes, what net debit or credit will be made for the year 2017 relating to the accumulated depreciation for the equipment transfer?

Credit accumulated depreciation, $46,000. Accumulated Depreciation $48,000 - Amortization of Gain for First Year $2,000 = $46,000 Credit to Accumulated Depreciation for 2017

Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2017, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2017 and 2018, respectively. Leo uses the equity method to account for its investment. On a consolidation worksheet, what adjustment would be made for 2017 regarding the land transfer?

Credit land for $15,000. Credit the Land account for the Gain of $15,000, with any realized gain on the transfer deferred until the parcel is sold outside the entity in the future

Stark Company, a 90% owned subsidiary of Parker, Inc., sold land to Parker on May 1, 2017, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000, and $220,000 for 2017, 2018, and 2019, respectively. Parker sold the land purchased from Stark in 2017 for $92,000 in 2019. Both companies use the equity method of accounting. Which of the following will be included in a consolidation entry for 2017?

Credit loss for $5,000

Stark Company, a 90% owned subsidiary of Parker, Inc., sold land to Parker on May 1, 2017, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000, and $220,000 for 2017, 2018, and 2019, respectively. Parker sold the land purchased from Stark in 2017 for $92,000 in 2019. Both companies use the equity method of accounting. Which of the following will be included in a consolidation entry for 2018?

Credit retained earnings for $5,000

Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2017, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2017 and 2018, respectively. Leo uses the equity method to account for its investment. On a consolidation worksheet, having used the equity method, what adjustment would be made for 2018 regarding the land transfer?

Debit investment in Stiller for $15,000.

Goehring, Inc. owns 70 percent of Harry Corp. The consolidated income statement for a year reports $40,000 Noncontrolling Interest in Harry Corp.'s Net Income. Harry paid dividends in the amount of $100,000 for the year. What are the effects of these transactions in the consolidated statement of cash flows for the year?

Decrease in the financing section of $30,000.

On January 1, 2017, 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 2017 and 2018, respectively. All net income effects of the intra-entity transfer are attributed to the seller for consolidation purposes. What is the net effect on net income as a result of consolidating adjustments made in 2017 with respect to the equipment transfer?

Decrease net income by $10,000. Deferred Recognition of Gain on Transfer $12,000 - Amortization of Gain for First Year $2,000 = $10,000 Decrease in Net Income for 2017

Which of the following is not a potential loss or return of a variable interest entity?

Entities holder to receive shares of common stock

A variable interest entity can take all of the following forms except a(n):

Estate

Which of the following statements is true regarding the sale of subsidiary shares when using the acquisition method for accounting for business combinations?

If control continues, the difference between selling price and carrying value is recorded as an adjustment to additional paid-in capital.

When a parent uses the acquisition method for business combinations and sells shares of its subsidiary, which of the following statements is false?

If majority control is not maintained but significant influence exists, the equity method is still used to account for the investment and consolidated financial statements are still required.

In a step acquisition, which of the following statements is false?

Income from subsidiary is computed for the entire year for a new purchase acquired during the year.

When a subsidiary is acquired sometime after the first day of the fiscal year, which of the following statements is true?

Income from subsidiary is recognized from date of acquisition to year-end

Strickland Company sells inventory to its parent, Carter Company, at a profit during 2017. Carter sells one-third of the inventory in 2017. In the consolidation worksheet for 2017, which of the following accounts would be credited to defer unrecognized intra-entity gross profit with regard to the 2017 intra-entity transfers?

Inventory

Walsh Company sells inventory to its subsidiary, Fisher Company, at a profit during 2017. With respect to one-third of the inventory sold to Fisher, Walsh accounts for it using the equity method of accounting. In the consolidation worksheet for 2017, which of the following accounts would be credited to eliminate unrecognized intra-entity gross profit with regard to the 2017 intra-entity transfers?

Inventory

Walsh Company sells inventory to its subsidiary, Fisher Company, at a profit during 2017. With respect to one-third of the inventory sold to Fisher, Walsh accounts for it using the equity method of accounting. In the consolidation worksheet for 2018, which of the following accounts would be debited to eliminate unrecognized intra-entity gross profit with regard to the 2017 intra-entity transfers?

Investment in Fisher Company

McGraw Corp. owned all of the voting common stock of both Ritter Co. and Lawler Co. During 2018, Ritter sold inventory to Lawler. The goods had cost Ritter $65,000, and they were sold to Lawler for $100,000. At the end of 2018, Lawler still held 30% of the inventory. Required: How should the sale between Lawler and Ritter be accounted for in a 2018 consolidation worksheet? Show worksheet entries to support your answer

Lawler and Ritter are related parties since they are both part of a combined entity. The following consolidation entries should be prepared: Sales 100,000 Cost of Goods Sold 100,000 Cost of Goods Sold 10,500 Inventory 10,500

For business combinations involving less than 100 percent ownership, the acquirer recognizes and measures all of the following at the acquisition date except:

Liabilities assumed, at book value.

Which of the following statements is true concerning an intra-entity transfer of a depreciable asset?

Net income attributable to the noncontrolling interest is affected only when the transfer is upstream.

Edgar Co. acquired 60% of Stendall Co. on January 1, 2018. During 2018, Edgar made several sales of inventory to Stendall. The cost and sales price of the goods were $140,000 and $200,000, respectively. Stendall still owned one-fourth of the goods at the end of 2018. Consolidated cost of goods sold for 2018 was $2,140,000 due to a consolidating adjustment for intra-entity transfers less intra-entity gross profit in Stendall's ending inventory. How would net income attributable to the noncontrolling interest be different if the transfers had been for the same amount and cost, but from Stendall to Edgar?

Net income attributable to the noncontrolling interest would have decreased by $6,000.

Which of the following characteristics is not indicative of an enterprise qualifying as a primary beneficiary with a controlling financial interest in a variable interest entity?

No ability to make decisions about the entity's activities.

If a subsidiary issues a stock dividend, which of the following statements is true?

No adjustment is necessary.

What would differ between a statement of cash flows for a consolidated company and an unconsolidated company using the indirect method?

Noncontrolling interest in net income of subsidiary would be added to net income.

MacDonald, Inc. owns 80 percent of the outstanding stock of Stahl Corporation. During the current year, Stahl made $125,000 in sales to MacDonald. How does this transfer affect the consolidated statement of cash flows?

Not reported in the consolidated statement of cash flows.

Wolff Corporation owns 70 percent of the outstanding stock of Donald, Inc. During the current year, Donald made $75,000 in sales to Wolff. How does this transfer affect the consolidated statement of cash flows?

Not reported in the consolidated statement of cash flows.

Virginia Corp. owned all of the voting common stock of Stateside Co. Both companies use the perpetual inventory method, and Virginia decided to use the partial equity method to account for this investment. During 2017, Virginia made cash sales of $400,000 to Stateside. The gross profit rate was 30% of the selling price. By the end of 2017, Stateside had sold 75% of the goods to outside parties for $420,000 cash. . Prepare journal entries for Virginia and Stateside to record the sales/purchases during 2017.

On the books of Virginia: Cash 400,000 Sales 400,000 Cost of Goods Sold ($400,000 x 70%) 280,000 Inventory 280,000 On the books of Stateside: Inventory 400,000 Cash 400,000 Cash 420,000 Sales 420,000 Cost of Goods Sold 300,000 Inventory 300,000

When a parent uses the initial value method throughout the year to account for its 80% investment in an acquired subsidiary, which of the following statements is true at the date immediately preceding the date on which adjustments are made on the consolidated worksheet?

Parent company dividends equal consolidated dividends

When a parent uses the partial equity method throughout the year to account for its 80% investment in an acquired subsidiary, which of the following statements is true at the date immediately preceding the date on which adjustments are made on the consolidated worksheet?

Parent company dividends equals consolidated dividends.

In reporting consolidated earnings per share when there is a wholly owned subsidiary, which of the following statements is true?

Parent company earnings per share equals consolidated earnings per share when the equity method is used.

When a parent uses the equity method throughout the year to account for its 80% investment in an acquired subsidiary, which of the following statements is false at the date immediately preceding the date on which adjustments are made on the consolidated worksheet?

Parent company total assets equals consolidated total assets.

When consolidating a subsidiary that was acquired on a date other than the first day of the fiscal year, which of the following statements is true of the subsidiary with respect to the presentation of consolidated financial statement information?

Pre-acquisition earnings are ignored in the consolidated income statement.

Strayten Corp. is a wholly owned subsidiary of Quint Inc. Quint decided to use the initial value method to account for this investment. During 2018, Strayten sold Quint goods, which had cost $48,000. The selling price was $64,000. Quint still had one-eighth of the goods purchased from Strayten on hand at the end of 2018. Required: Prepare Consolidation Entry *G, which would have to be recorded at the end of 2019

Retained Earnings (($64,000 - $48,000) x 1/8) 2,000 Cost of Goods Sold 2,000

Virginia Corp. owned all of the voting common stock of Stateside Co. Both companies use the perpetual inventory method, and Virginia decided to use the partial equity method to account for this investment. During 2017, Virginia made cash sales of $400,000 to Stateside. The gross profit rate was 30% of the selling price. By the end of 2017, Stateside had sold 75% of the goods to outside parties for $420,000 cash. Prepare any 2018 consolidation worksheet entries that would be required regarding the 2017 inventory transfer.

Retained Earnings 30,000 Cost of Goods Sold 30,000

Strickland Company sells inventory to its parent, Carter Company, at a profit during 2017. Carter sells one-third of the inventory in 2017. In the consolidation worksheet for 2018, assuming Carter uses the initial value method of accounting for its investment in Strickland, which of the following accounts would be debited to defer unrecognized intra-entity gross profit with regard to the 2017 intra-entity transfers?

Retained earnings

Strickland Company sells inventory to its parent, Carter Company, at a profit during 2017. Carter sells one-third of the inventory in 2017. In the consolidation worksheet for 2017, which of the following accounts would be debited to eliminate the intra-entity transfer of inventory?

Sales

Walsh Company sells inventory to its subsidiary, Fisher Company, at a profit during 2017. With respect to one-third of the inventory sold to Fisher, Walsh accounts for it using the equity method of accounting. In the consolidation worksheet for 2017, which of the following accounts would be debited to eliminate the intra-entity transfer of inventory?

Sales

A parent company owns a controlling interest in a subsidiary whose stock has a valuation basis of $27 per share. On the last day of the year, the subsidiary issues new shares entirely to outside parties at $25 per share. The parent still holds control over the subsidiary. Which of the following statements is true?

Since the shares were sold for less than the adjusted subsidiary value per share, the parent's investment account must be decreased.

A parent company owns a controlling interest in a subsidiary and on the last day of the year, the subsidiary issues new shares entirely to outside parties at $33 per share. The parent still holds control over the subsidiary. The adjusted subsidiary value at the date of the new stock issuance was $27 per share. Which of the following statements is true?

Since the shares were sold for more than the adjusted subsidiary value per share, the parent's investment account must be increased.

A parent company owns a 70 percent interest in a subsidiary whose stock has a valuation basis of $27 per share. On the last day of the year, the subsidiary issues new shares for $27 per share, and the parent buys its 70 percent interest in the new shares. Which of the following statements is true?

Since the shares were sold for the same per share amount as the the adjusted subsidiary value per share, and the parent bought 70 percent of the shares, the parent's investment account is not affected except for the total acquisition amount for the new shares.

All of the following are examples of variable interests except:

Stock Options

Which of the following statements regarding consolidation of a VIE with its primary beneficiary is true?

The allocation of the VIE's net income is based on an analysis of the underlying contractual arrangements between the primary beneficiary and other holders of variable interests.

Which of the following methods is not used to value a noncontrolling interest under circumstances where a control premium is applied to determine the appropriate value for such interest?

The application of a safe harbor discount rate.

Which of the following statements is false regarding multiple acquisitions of a subsidiary's existing common stock?

The book value of the subsidiary will increase.

Which of the following is not a factor that indicates a business enterprise that establishes a variable interest entity (VIE) should consolidate such VIE with its own financial statements?

The business enterprise establishing a VIE receives risks and rewards of the VIE in proportion to equity ownership.

Jax Company used the acquisition method when it acquired its investment in Saxton Company. Jax now sells some of its shares of Saxton such that neither control nor significant influence exists. Which of the following statements is true?

The difference between selling price and carrying value is recorded as a realized gain or loss.

On January 1, 2018, Riley Corp. acquired some of the outstanding bonds of one of its subsidiaries. The bonds had a carrying value of $421,620, and Riley paid $401,937 for them. How should you account for the difference between the carrying value and the purchase price in the consolidated financial statements for 2018?

The difference is treated as a gain from the extinguishment of the debt.

A subsidiary issues new shares of common stock. If the parent acquires all of these shares at an amount greater than book value, which of the following statements is true?

The investment in subsidiary will decrease.

A parent acquires 70% of a subsidiary's common stock and 60 percent of its preferred stock. The preferred stock is noncumulative. The current year's dividend was paid. How is the noncontrolling interest in the subsidiary's net income assigned?

The noncontrolling interest in consolidated net income is assigned as 40 percent of the preferred stock dividends plus 30% of the subsidiary's income after subtracting all preferred stock dividends.

A parent acquires all of a subsidiary's common stock and 60 percent of its preferred stock. The preferred stock has a cumulative dividend. No dividends are in arrears. How is the noncontrolling interest in the subsidiary's net income assigned?

The noncontrolling interest in consolidated net income is assigned as 40 percent of the preferred stock dividends.

A subsidiary issues new shares of common stock at an amount below book value. Outsiders buy all of these shares. Which of the following statements is true?

The parent's additional paid-in capital will be decreased.

Which of the following statements is false concerning variable interest entities (VIEs)?

A VIE cannot take the legal form of a partnership or corporation.

The accounting problems encountered in consolidated intra-entity debt transactions when the debt is acquired by an affiliate from an outside party include all of the following except:

A gain or loss must be recognized by both parent and subsidiary companies.

Parent sold land to its subsidiary resulting in a gain in 2016, the year of transfer. The subsidiary sold the land to an unrelated third party for a gain in 2019. Which of the following statements is true?

A gain will be recognized in the consolidated income statement in 2019.

Which of the following statements is true regarding an intra-entity transfer of land?

A loss and a gain are deferred until the land is sold to an outside party.

If new bonds are issued from a parent to its subsidiary, which of the following statements is false?

A net gain or loss on the bond transaction will be reported.

An intra-entity transfer took place whereby the transfer price was less than the book value of a depreciable asset. Which statement is true for the year subsequent to the year of transfer?

A worksheet entry is made with a credit to investment in subsidiary for a downstream transfer when the parent uses the equity method.

An intra-entity transfer took place whereby the book value exceeded the transfer price of a depreciable asset. Which statement is true for the year after the year of transfer?

A worksheet entry is made with a credit to retained earnings for an upstream transfer.

An intra-entity transfer of a depreciable asset took place whereby the transfer price exceeded the book value of the asset. Which statement is true with respect to the year following the year in which the transfer occurred?

A worksheet entry is made with a debit to investment in subsidiary for a downstream transfer when the parent uses the equity method.

Dalton Corp. owned 70% of the outstanding common stock of Shrugs Inc. On January 1, 2016, Dalton acquired a building with a ten-year life for $420,000. No salvage value was anticipated and the building was to be depreciated on the straight-line basis. On January 1, 2018, Dalton sold this building to Shrugs for $392,000. At that time, the building had a remaining life of eight years but still no expected salvage value. For consolidation purposes, what is the Excess Depreciation (ED entry) for this building for 2018?

Accumulated Depreciation 7,000 Depreciation expense 7,000

Which of the following statements is true for a consolidated statement of cash flows?

All of parent's dividends and noncontrolling interest of subsidiary's dividends are deducted as a financing activity.

Which of the following statements is true concerning the acquisition of existing debt of a consolidated affiliate in the year of the debt acquisition?

Any gain or loss is recognized in the year of acquisition on a consolidated income statement.

Which one of the following characteristics of preferred stock would make the stock a dilutive security for purposes of calculating earnings per share?

The preferred stock is convertible.

All of the following statements regarding the sale of subsidiary shares are true except which of the following?

The use of specific LIFO assumption is acceptable

Where do dividends paid by a subsidiary to the parent company appear in a consolidated statement of cash flows?

They do not appear in the consolidated statement of cash flows.

Where do intra-entity transfers of inventory appear in a consolidated statement of cash flows?

They do not appear in the consolidated statement of cash flows.

How do outstanding subsidiary stock warrants affect the calculation of consolidated earnings per share?

They will only be included in diluted earnings per share if they are dilutive.

Regency Corp. recently acquired $500,000 of the bonds of Safire Co., one of its subsidiaries, paying more than the carrying value of the bonds. According to the most practical view of this intra-entity transaction, to whom should the loss be attributed?

To Regency because Regency is the controlling party in the business combination.

In comparing U.S. GAAP and International Financial Reporting Standards (IFRS) with regard to a basis for measurement of a noncontrolling interest, which of the following is true?

U.S. GAAP requires acquisition-date fair value measurement, but IFRS allows an option for acquisition-date fair value measurement.

On November 8, 2018, Power Corp. sold land to Wood Co., its wholly owned subsidiary. The land cost $61,500 and was sold to Wood for $89,000. For consolidated financial statement reporting purposes, when must the gain on the sale of the land be recognized?

When Wood Co. sells the land to a third party

During 2017, Von Co. sold inventory to its wholly-owned subsidiary, Lord Co. The inventory cost $30,000 and was sold to Lord for $44,000. For consolidation reporting purposes, when is the $14,000 intra-entity gross profit recognized? A) No gain can be recognized since the transfer was between related parties.

When goods are transferred to a third party by Lord.

How do intra-entity transfers of inventory affect the preparation of a consolidated statement of cash flows?

Because the consolidated balance sheet and income statement are used in preparing the consolidated statement of cash flows, no special elimination is required.

In measuring the noncontrolling interest immediately following the date of acquisition, which of the following would not be indicative of the value attributed to the noncontrolling interest?

Book value of subsidiary net assets.

Strickland Company sells inventory to its parent, Carter Company, at a profit during 2017. Carter sells one-third of the inventory in 2017. . In the consolidation worksheet for 2017, which of the following accounts would be debited to eliminate unrecognized intra-entity gross profit with regard to the 2017 intra-entity transfers?

Cost of goods sold

Walsh Company sells inventory to its subsidiary, Fisher Company, at a profit during 2017. With respect to one-third of the inventory sold to Fisher, Walsh accounts for it using the equity method of accounting. In the consolidation worksheet for 2017, which of the following accounts would be debited to eliminate unrecognized intra-entity gross profit with regard to the 2017 intra-entity transfers?

Cost of goods sold

Walsh Company sells inventory to its subsidiary, Fisher Company, at a profit during 2017. With respect to one-third of the inventory sold to Fisher, Walsh accounts for it using the equity method of accounting. In the consolidation worksheet for 2018, which of the following accounts would be credited to eliminate unrecognized intra-entity gross profit with regard to the 2017 intra-entity transfers?

Cost of goods sold

Walsh Company sells inventory to its subsidiary, Fisher Company, at a profit during 2017. With respect to one-third of the inventory sold to Fisher, Walsh accounts for it using the equity method of accounting.. In the consolidation worksheet for 2017, which of the following accounts would be credited to eliminate the intra-entity transfer of inventory?

Cost of goods sold

Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2017, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2017 and 2018, respectively. Leo uses the equity method to account for its investment. Assuming there are no excess amortizations or other intra-entity transactions, compute income from Stiller on Leo's books for 2017.

$1,000

Stiller Company, an 80% owned subsidiary of Leo Company, purchased land from Leo on March 1, 2017, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2017 and 2018, respectively. Leo uses the equity method to account for its investment. Compute the gain or loss on the intra-entity transfer of land that should be reported on the books of Stiller prior to consolidation.

$15,000 gain. Subsidiary's Land Transfer Value $75,000 - Subsidiary's Land BV $60,000 = $15,000 Gain on Intra-Entity Sale of Land

Stark Company, a 90% owned subsidiary of Parker, Inc., sold land to Parker on May 1, 2017, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000, and $220,000 for 2017, 2018, and 2019, respectively. Parker sold the land purchased from Stark in 2017 for $92,000 in 2019. Both companies use the equity method of accounting. Compute the gain or loss reported on Stark's books prior to consolidation from the intra-entity transfer of land in 2017.

$5,000 loss

Which of the following statements is true concerning variable interest entities (VIEs)? (1.) The role of the VIE equity investors can be fairly minor. (2.) A VIE may be created specifically to benefit the business enterprise that established it with low-cost financing. (3.) VIE governing agreements often limit activities and decision-making. (4.) VIEs usually have a well-defined and limited business activity.

1, 2, 3, and 4.

Tara Company owns 80 percent of the common stock of Stodd Inc. In the current year, Tara reports sales of $5,000,000 and cost of goods sold of $3,500,000. For the same period, Stodd has sales of $500,000 and cost of goods sold of $400,000. During the year, Stodd sold merchandise to Tara for $40,000 at a price based on the normal markup. At the end of the year, Tara still possesses 20 percent of this inventory. Prepare the consolidation entry to defer intra-entity gross profit.

Cost of Goods Sold 1,600 Inventory 1,600

Strickland Company sells inventory to its parent, Carter Company, at a profit during 2017. Carter sells one-third of the inventory in 2017 In the consolidation worksheet for 2017, which of the following accounts would be credited to eliminate the intra-entity transfer of inventory?

Cost of goods sold

Strickland Company sells inventory to its parent, Carter Company, at a profit during 2017. Carter sells one-third of the inventory in 2017. In the consolidation worksheet for 2018, assuming Carter uses the initial value method of accounting for its investment in Strickland, which of the following accounts would be credited to defer recognition of intra-entity gross profit with regard to the 2017 intra-entity transfers?

Cost of goods sold

Where do dividends paid to the noncontrolling interest of a subsidiary appear on a consolidated statement of cash flows?

Cash flows from financing activities.

Which of the following variable interests entitles a holder to residual profits, losses, and dividends?

Common stock

Edgar Co. acquired 60% of Stendall Co. on January 1, 2018. During 2018, Edgar made several sales of inventory to Stendall. The cost and sales price of the goods were $140,000 and $200,000, respectively. Stendall still owned one-fourth of the goods at the end of 2018. Consolidated cost of goods sold for 2018 was $2,140,000 due to a consolidating adjustment for intra-entity transfers less intra-entity gross profit in Stendall's ending inventory. How would consolidated cost of goods sold have differed if the inventory transfers had been for the same amount and cost, but from Stendall to Edgar?

Consolidated cost of goods sold would have remained $2,140,000

How would consolidated earnings per share be calculated if the subsidiary has no convertible securities or warrants?

Consolidated net income divided by parent's number of shares outstanding.

Which of the following statements is false regarding the assignment of a gain or loss when an affiliate's debt instrument is acquired on the open market?

Consolidated net income is not affected by a gain or loss on the debt transaction.

Yoderly Co., a wholly owned subsidiary of Nelson Corp., sold goods to Nelson near the end of 2018. The goods had cost Yoderly $105,000 and the selling price was $140,000. Nelson had not sold any of the goods by the end of the year. Required: Prepare Consolidation Entry TI and Consolidation Entry G that are required for 2018.

Consolidation Entry TI Sales 140,000 Cost of Goods Sold 140,000 Consolidation Entry G Cost of Goods Sold 35,000 Inventory 35,000

Virginia Corp. owned all of the voting common stock of Stateside Co. Both companies use the perpetual inventory method, and Virginia decided to use the partial equity method to account for this investment. During 2017, Virginia made cash sales of $400,000 to Stateside. The gross profit rate was 30% of the selling price. By the end of 2017, Stateside had sold 75% of the goods to outside parties for $420,000 cash. Prepare the consolidation entries that should be made at the end of 2017

Consolidation Entry TI Sales 400,000 Cost of Goods Sold 400,000 Consolidation Entry G Cost of Goods Sold 30,000 Inventory 30,000

King Corp. owns 85% of James Co. King uses the equity method to account for its investments. During 2018, King sells inventory to James for $500,000. The inventory originally cost King $420,000. At 12/31/2018, 25% of the goods were still in James' inventory. Required: Prepare the Consolidation Entry TI and Consolidation Entry G for the consolidation worksheet.

Consolidation Entry TI Sales 500,000 Cost of Goods Sold 500,000 Consolidation Entry G Cost of Goods Sold 20,000 Inventory 20,000

Flintstone Inc. acquired all of Rubble Co. on January 1, 2018. Flintstone decided to use the initial value method to account for this investment. During 2018, Flintstone sold to Rubble for $600,000 inventory with a cost of $500,000. At the end of the year 30% of the goods were still in Rubble's inventory. Required: Prepare Consolidation Entry TI for the intra-entity transfer and Consolidation Entry G for the ending inventory adjustment necessary for the consolidation worksheet at 12/31/20.

Consolidation Entry TI Sales 600,000 Cost of Goods Sold 600,000 Consolidation Entry G Cost of Goods Sold 30,000 Inventory 30,000