P6-2

90% Adjustment and Elim

Mikko OYJ
Jenna OYJ Debit
Income Statement
Sales $ 7,300 $ 6,000
Gain on sale of equipment $ 200 $ 200
Gain on sale of building $ 500 $ 500
Income from Jenna OYJ $ 1,255 $ 1,255
Cost of sales $ (5,000) $ (3,500)
Depreciation Expenses
Other Expenses $ (1,000) $ (800)
Non-controlling interest share $ 195
Controlling share of Net Income $ 3,055 $ 1,900
Retained Earnings Statement
Retained Earnings - Mikko OYJ $ 3,290
Retained Earnings - Jenna OYJ $ 1,000 $ 1,000
Controlling share of Net Income $ 3,055 $ 1,900
Dividends $ (500) $ (200)

Retained Earnings - December 31 $ 5,845 $ 2,700

Balance Sheet
Cash $ 1,000 $ 800
Accounts Receivable $ 1,200 $ 400
Inventory $ 1,400 $ 800
Land $ 600 $ 300
Equipment-net $ 1,900 $ 1,400 $ 50
Building-net $ 3,000 $ 2,000
Investment in Jenna OYJ $ 4,045 $ 180

Goodwill $ 500
Total Assets $ 13,145 $ 5,700

Accounts Payable $ 1,300 $ 1,000

Common Stock $ 6,000 $ 2,000 $ 2,000
Retained Earnings $ 5,845 $ 2,700
$ 13,145 $ 5,700
Non-controlling interest January 1 $ 20
Non-controlling interest December 31
Total Liabilities and Equity $ 5,900

Supported Journals and Computation

Net Income (1900*90%) $ 1,710
Add: Realized Profit (200*90%) $ 180
Less: Unrealized gain-equipment (200*90%) $ (180)
Add: Piecemeal recognition ((200/4)*90%) $ 45
Less: Unrealized gain-building (2000-1500) $ (500)
Income from Jenna $ 1,255

Investment in Jenna 180

Non-Controlling interest 20
Cost of Sales 200

Gain on Sale of Equipment 200

Equipment 200

Accumulated Depreciation-Equipment 50
Depreciation Expense 50

Income from Jenna 1255

Investment in Jenna 1075
Dividend 180
 Adjustment and Elimination Consolidated
Debit Credit Statement

$ 13,300
$ 200
$ 500
$ 1,255
$ 200 $ (8,300)
$ 50 $ 50
$ (1,800)
$ 195 $ (195)
$ 3,055

$ 3,290
$ 1,000
$ 3,055
$ 180 $ (500)
$ 20
$ 5,845

$ 1,800
$ 1,600
$ 2,200
$ 900
$ 50 $ 200 $ 3,150
$ 500 $ 4,500
$ 180 $ 1,075
$ 3,150 $ -
$ 500 $ 500
$ 14,650

$ 2,300
$ 2,000 $ 6,000
$ 5,845

$ 20 $ 350
$ 175 $ 505
$ 5,900 $ 5,900 $ 14,650
Net Income (1900*10%) $ 190 Implies FV 3150/90%
Add: Realized Profit (200*10%) $ 20 Book Value
Less: Unrealized gain-equipment (200*10%) $ (20) Goodwill
Add: Piecemeal recognition ((200/4)*10%) $ 5
Non-controlling interest share $ 195

Non-Controlling Interest Share 195

Non-Controlling Interest 175
Dividend 20

Common Stock 2000

Retained Earnings 1000
Goodwill 500
Investment In Jenna 3150
Non-Controlling Interest 350

Gain on Sale of Building 500

Building 500
$ 3,500
$ 3,000
$ 500