Name : Junita Grace Magdalena Wafom

Advanced Accounting 1 Assignment Chapter 5

Answer
Preliminary computations:
Unrealized profit in beginning inventory equals:
$72,000 - ($72,000/1.5) = $ 24,000

Unrealized profit in ending inventory:

$66,000 - ($66,000/1.5) = $ 22,000

Consolidated net income:

Sales (combined $1,260,000 - $490,000 intercompany) $770,000
Cost of Goods Sold (see below) (133,000)
Expenses (215,000)
Consolidated net income 422,000
Noncontrolling interest share (see below) (36,400)
Controlling interest share $ 385,600

Consolidated cost of goods sold computation:

Combined cost of sales ($460,000 + $165,000) $625,000
Less: Intercompany sales (490,000)
Less: Unrealized profit in beginning inventory (24,000)
Add: Unrealized profit in ending inventory 22,000
Consolidated Cost of Goods Sold $133,000

Noncontrolling interest share calculation:

Seel separate net income $180,000
Add: Unrealized profit in beginning inventory
from upstream sale 24,000
Less: Unrealized profit in ending inventory
from upstream sale (22,000)
Seel's adjusted net income $182,000
Noncontrolling interest share (20%) $36,400