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 Topic: Becker F3 - interco trans mcq -killer mcq ( Topic Closed)
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aimedcpa
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| Posted: 31 Mar 2010 at 20:26 | IP Logged
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Selected information from the separate and consolidated balance sheets and income statements of Pard, Inc. and its subsidiary, Spin Co., as of December 31, 1991, and for the year then ended is as follows:
Pard Spin Consolidated
Balance sheet accounts
Accounts receivable $ 26,000 $ 19,000 $ 39,000
Inventory 30,000 25,000 52,000
Investment in Spin 67,000 - -
Goodwill - - 30,000
Noncontrolling interest - - 10,000
Stockholders, equity 154,000 50,000 154,000
Pard Spin Consolidated
Income statement accounts
Revenues $200,000 $140,000 $308,000
Cost of goods sold 150,000 110,000 231,000
Gross profit 50,000 30,000 77,000
Equity in earnings of Spin 11,000 - -
Net income 36,000 20,000 40,000
Additional information:
• During 1991, Pard sold goods to Spin at the same markup on cost that Pard uses for all sales. At December 31, 1991, Spin had not paid for all of these goods and still held 37.5% of them in inventory.
• Pard acquired its interest in Spin on January 2, 1988.
In Pard's consolidated balance sheet, what was the carrying amount of the inventory that Spin purchased from Pard?
a.3000
b.6000
c90000= ans
d.12000
Pls explain sumone.....................
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gottobecpa
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| Posted: 31 Mar 2010 at 22:07 | IP Logged
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If you look at inventory, there is difference of $3000
(33,000 + 25000) - 52000 = $3,000
when u consolidate u remove the profit element in ending inventory, so this $3,000 is basically the profit that pard made when it sold goods to spin
Now we have to figure out, what was the profit % inorder to figure out at what price the goods were transferred, so for that u have to look at revenue and cost of goods sold for pard
Revenue $ 200,000
Cost of good sole $ 150,000
Diff &n bsp; &n bsp; $50,000
Profit % = 50,000/200,00 = 25%
now we can easily figure out at what price the goods were transferred
3000/.25 = $12,000 (this is the price at which the goods were transferred)
so the carrying amount was $12,000 - $3,000 = $9,000
I hope that helps
__________________
16-April-10-FARE-77!
29-May-10-AUD-81!
7-Aug-10-REG-76!
31-Aug-10-BEC-87 (unbelievable because studied the least for this, 15 days)
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aimedcpa
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| Posted: 31 Mar 2010 at 22:31 | IP Logged
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Thanx ............All the Best......
U seem to be really seem to be going gud with ur final review.......... .....................
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gottobecpa
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| Posted: 31 Mar 2010 at 22:53 | IP Logged
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I had my fair share of struggle too but I kept working on them, and I still struggle with some concepts.
All the best to you too
__________________
16-April-10-FARE-77!
29-May-10-AUD-81!
7-Aug-10-REG-76!
31-Aug-10-BEC-87 (unbelievable because studied the least for this, 15 days)
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cpameplz
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| Posted: 18 Sep 2010 at 20:47 | IP Logged
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Sorry to bump this old post, but I had a question. I
actually got the same answer, but in a totally different
way. I just wanted to ask here to see if my logic is
correct.
First I calculated total intercompany sales, which was:
(200,000 + 140,000) - 308,000 = 32,000
So 32,000 is the total inventory (including profit) sold
to Spin.
Then, I calculated profit at 50,000/200,000 = 25%.
Since the problem mentions that Pard sold the goods at
the same markup, then it's safe to say 32,000 * 25% =
8,000 is the markup, and 24,000 (the difference)
is the COGS.
Since the problem mentions that Spin is still holding
37.5% of the inventory, then 24,000 * 37.5% =
9,000 is the inventory still being held.
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