X-Beams Inc. owned 70% of the voting common stock of Kent Corp. During 2006, Kent made several sales of inventory to X-Beams. The total selling price was $180,000 and the cost was $100,000. At the end of the year, 20% of the goods were still in X-Beams' inventory. Kent's reported net income was $300,000 in 2006 and in 2007.
Assuming inventory is no longer sold by Kent to X-Beans do the following:
A. For 2006 and 2007 make the eliminations required for the consolidation of the the corporations. That is the TI, G, and *G.
B. Compute the realized income of Kent for 2006 and 2007 and compute the non-controlling interest income for 2006 and 2007 that would go in the non-controlling interest column on the consolidated work papers in the income statement section.
Always remember that when preparing elimination entries, you have to be cognizant of whether the transfer of inventory, land or any other depreciable ...
Eliminations of Intercompany Transactions are examined.