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    James Aguilar
    This document contains three cases that provide income statement information for parent companies and their subsidiaries. It asks to compute consolidated financial figures such as sales, cost of sales, and net income by eliminating intercompany transactions and unrealized profits between the companies.

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    Problems

    Uploaded by

    James Aguilar
    283 views2 pages
    This document contains three cases that provide income statement information for parent companies and their subsidiaries. It asks to compute consolidated financial figures such as sales, cost of sales, and net income by eliminating intercompany transactions and unrealized profits between the companies.

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    This document contains three cases that provide income statement information for parent companies and their subsidiaries. It asks to compute consolidated financial figures such as sales, cost of sales, and net income by eliminating intercompany transactions and unrealized profits between the companies.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    283 views2 pages

    Problems

    Uploaded by

    James Aguilar
    This document contains three cases that provide income statement information for parent companies and their subsidiaries. It asks to compute consolidated financial figures such as sales, cost of sales, and net income by eliminating intercompany transactions and unrealized profits between the companies.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    1.

    The separate incomes (which do not include investment income) of Pell Corp and Sell Corp, its 80%
    owned subsidiary, for 20x6 were determined as follows:

    Pell Sell

    Sales P400,000 P100,000

    Less: Cost of sales 200,000 60,000

    Gross profit 200,000 40,000

    Other expenses 100,000 30,000

    Separate incomes P100,000 P 10,000

    During 20x6 Pell sold merchandise that cost P20,000 to Sell for P40,000, and at Dec. 31, 20x6 half of
    these inventory items remained unsold by Sell. Compute the following:

    a) the NCI in net income for 20x6.

    b) the consolidated sales for 20x6.

    c) the consolidated cost of sales for 20x6.

    d) the consolidated net income (CNI) attributable to controlling interests for 20x6.

    2. Parry Corp owns an 80% interest in Starry Corp acquired several years ago. Starry regularly sells
    merchandise to its parent at 125% of Starry’s cost. Gross profit data of Parry and Starry for the year 20x6
    are as follows:

    Parry Starry

    Sales 1,000,000 800,000

    Cost of goods sold 800,000 640,000

    Gross profit 200,000 160,000

    During 20x6, Parry purchased inventory items from Starry at a transfer price of P400,000. Parry’s Dec
    31, 20x5 and 20x6 inventories included goods acquired from Starry of P100,000 and P125,000,
    respectively. Compute for the following:

    a) the consolidated sales of Parry Corp. and subsidiary for 20x6.

    b) the unrealized profits in the year end 20x5 and 20x6 inventories.

    c) the consolidated cost of goods sold of Parry and subsidiary for 20x6.
    3. Income Statement information for the year 20x6 of Perfect Corp. and its 60% owned subsidiary, Seven
    Corp, is as follows:

    Perfect Seven

    Sales 900,000 350,000

    Cost of Sales 400,000 250,000

    Gross profit 500,000 100,000

    Operating expenses 250,000 50,000

    Net income 250,000 50,000

    Intercompany sales for 20x6 are upstream (from Seven to Perfect) and total P100,000. Perfect’s Dec 31,
    20x5 and Dec 31, 20x6 inventories contain unrealized profits of P5,000 and P10,000, respectively.
    Compute for:

    a) consolidated sales for 20x6.

    b) consolidated cost of sales for 20x6.

    c) consolidated net income (CNI) attributable to controlling interests (CI) for 20x6.

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