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Consolidated Totals: Intercompany Transactions

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1. (TCO 1) Wathan Inc. sold $180,000 in inventory to Miller Co. during 2008, for $270,000. Miller resold $108,000 of this merchandise in 2008 with the remainder to be disposed of during 2009.
Required: Assuming Wathan owns 25% of Miller and applies the equity method, prepare the journal entry Walthan should have recorded at the end of 2008 to defer the unrealized inter-company inventory profit? Show all of your work to arrive at the amount in your journal entry. Showing only the answer will result in zero points.

3. (TCO 3) What is pre-acquisition income? Be Specific

4. (TCO 3) Pennant Corp. owns 70% of the common stock of Scarvens Co. Scarvens' revenues for 2009 totaled $200,000.
Required: What amount of Scarvens' revenues would be included in the consolidated total under the economic unit concept?

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Hello Student,

Kindly see the response for each question below:

1. (TCO 1) Wathan Inc. sold $180,000 in inventory to Miller Co. during 2008, for $270,000. Miller resold $108,000 of this merchandise in 2008 with the remainder to be disposed of during 2009.
Required: Assuming Wathan owns 25% of ...

Solution Summary

This solution provides responses to that shows the journal entries necessary to defer unrealized inter-company inventory profit; tells what is pre-acquisition income; and shows how revenue is determined under the economic unit concept.

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Consolidated Financial Statements/Intercompany Asset transactions

Please help with the following problem involving financial statements.

Hardwood, Inc., holds a 90 percent interest in Pittstoni Company. During 2009, Pittstoni sold inventory costing $77,000 to Hardwood for $110,000. Of this inventory, $40,000 worth was not sold to outsiders until 2010. During 2010, Pittstoni sold inventory costing $72,000 to Hardwood for $120,000. A total of $50,000 of this inventory was not sold to outsiders until 2011. In 2010, Hardwood reported net income of $150,000 while Pittstoni reported $90,000. What is the noncontrolling interest in the 2010 income of the subsidiary?

a) 8,000
b) 8,200
c) 9,000
d) 9,800

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