{"id":1572,"date":"2024-07-11T07:56:18","date_gmt":"2024-07-11T07:56:18","guid":{"rendered":"https:\/\/britainwriters.com\/answers\/?p=1572"},"modified":"2024-07-11T07:56:20","modified_gmt":"2024-07-11T07:56:20","slug":"princes-consolidated-income-statement-assignment","status":"publish","type":"post","link":"https:\/\/britainwriters.com\/answers\/princes-consolidated-income-statement-assignment\/","title":{"rendered":"Prince’s Consolidated Income Statement Assignment"},"content":{"rendered":"\n

Assignment Task<\/strong><\/h3>\n\n\n\n

Required information<\/strong><\/p>\n\n\n\n

Prince Inc. (Prince) purchased 90% of the voting shares of Charming Company (Charming) for $720,000 on July 1, 2020. On that date, Charming’s common shares and retained earnings were valued at $200,000 and $400,000, respectively. Unless otherwise stated, assume that Prince uses the cost method to account for its investment in Charming. Prince uses the fair value enterprise method to value the non-controlling interest.<\/p>\n\n\n\n

Charming’s fair values approximated its carrying values with the exception of the following:<\/p>\n\n\n\n

Charming’s bonds payable had a fair value which was $50,000 higher than their carrying value. The bonds payable mature on July 1, 2030. Both companies use straight line amortization.<\/p>\n\n\n\n

The financial statements of both companies for the year ended June 30, 2023 are shown below:<\/p>\n\n\n\n

Income Statements<\/strong>
 <\/p>\n\n\n\n

 <\/td>Price Inc.<\/strong><\/td>Charming Company<\/strong><\/td><\/tr>
Sales<\/td>$500,000<\/td>$400,000<\/td><\/tr>
Other revenues<\/td>100,000<\/td>60,000<\/td><\/tr>
Less: Expenses<\/strong><\/td> <\/td> <\/td><\/tr>
Cost of goods sold<\/td>400,000<\/td>320,000<\/td><\/tr>
Depreciation\/amortization expense<\/td>20,000<\/td>10,000<\/td><\/tr>
Other expenses<\/td>60,000<\/td>30,000<\/td><\/tr>
Income tax expense<\/td>48,000<\/td>40,000<\/td><\/tr>
Net Income<\/td>$72,000<\/td>$60,000<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Retained Earnings Statements<\/strong><\/p>\n\n\n\n

 <\/td>Prince Inc.<\/strong><\/td>Charming Company<\/strong><\/td><\/tr>
Balance, July 1, 2022<\/td>$420,000<\/td>$240,000<\/td><\/tr>
Net income <\/td>72,000<\/td>60,000<\/td><\/tr>
Less: dividends<\/td>(22,000)<\/td>(30,000)<\/td><\/tr>
Retained earnings, June 30, 2023<\/td>$470,000
 <\/td>		$270,000
 <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Balance sheets<\/strong><\/p>\n\n\n\n

 <\/td>Prince Inc.<\/strong>
 <\/td>		Charming Company<\/strong>
 <\/td><\/tr>
Cash<\/td>$150,000
 <\/td>		$120,000
 <\/td><\/tr>
Accounts receivable
 <\/td>		350,000
 <\/td>		160,000
 <\/td><\/tr>
Inventory<\/td>200,000
 <\/td>		180,000<\/td><\/tr>
Investment in Charming.
 <\/td>		720,000<\/td>–<\/td><\/tr>
Land<\/td>40,000<\/td>–<\/td><\/tr>
Equipment (net)
 <\/td>		360,000<\/td>240,000
 <\/td><\/tr>
Total assets
 <\/td>		$1,820,000
 <\/td>		$700,000
 <\/td><\/tr>
Current liabilities
 <\/td>		$600,000
 <\/td>		$130,000
 <\/td><\/tr>
Bonds payable<\/td>250,000<\/td>100,000<\/td><\/tr>
Common shares<\/td>500,000
 <\/td>		200,000<\/td><\/tr>
Retained earnings
 <\/td>		470,000
 <\/td>		270,000
 <\/td><\/tr>
Total liabilities and equity
 <\/td>		$1,820,000
 <\/td>		$700,000
 <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Other Information:<\/strong><\/p>\n\n\n\n

\u2022 During August of 2021, Prince sold $60,000 worth of inventory to Charming, 80% of which was sold to outsiders during the year. During October of 2022, Prince sold inventory to Charming for $90,000 of which 65% of this inventory was resold by Charming to outside parties in June 2023.<\/p>\n\n\n\n

\u2022 During September of 2021, Charming sold $90,000 worth of inventory to Prince, 50% of which was sold to outsiders during the year. During April of 2023, Charming sold Inventory to Prince for $120,000. 80% of this Inventory was resold by Prince to outside parties in May 2023.<\/p>\n\n\n\n

\u2022 During May of 2023, Charming sold a plot of land to Prince for $40,000. The land was recorded at cost of $24,000 on Charming’s books prior to the sale. Prince has not yet sold the land.<\/p>\n\n\n\n

\u2022 Charming rents office space from Prince. The other expenses include rent expenses of $20,000.
 The rate of gross profit on all intercompany sales is 25% of sales. The effective tax rate for both companies is 40%. Assume that any gain on the sale of land is fully taxable.<\/p>\n\n\n\n

a. Compute a Statement of Consolidated Net Income for Prince Inc. for the Year Ended June 30, 2023, and the computation of the profit attributable to Non-Controlling Interests (NCI).<\/strong><\/p>\n\n\n\n

b. Prepare Prince’s consolidated income statement for the year ended June 30, 2023, showing the allocation of the consolidated net income between the controlling and non-controlling interests (NCI).<\/strong><\/p>\n\n\n\n

Calculate the non-controlling interest (Balance Sheet) as at June 30, 2023.<\/strong><\/p>\n\n\n\n

Prepare in good form the consolidated balance sheet of Prince Inc as at June 30, 2023.<\/strong><\/p>\n\n\n\n

a. Prepare a Statement of Computation and Allocation of Acquisition Differential showing the allocation of Acquisition Differential to the Fair Market Value Increments and Goodwill (if any).<\/strong><\/p>\n\n\n\n

b. What is the balance of Non-Controlling Interests (NCI) on the date of the acquisition?<\/strong><\/p>\n\n\n\n

c. Prepare an Amortization \/ Impairment Schedule, in good form, for the Year Ended June 30th 2023<\/strong><\/p>\n\n\n\n

Calculate consolidated retained earnings as at June 30,  2023<\/strong><\/p>\n\n\n\n

Calculate the non-controlling interest (Balance Sheet) as at June 30, 2023.<\/strong><\/p>\n\n\n\n

a. Prepare a schedule of Realized \/ Unrealized Profits on Inter-Company Sale \/ Purchase of Inventory detailing the realized and unrealized before-tax and after-tax profits for 2023<\/strong><\/p>\n\n\n\n

b. Prepare a schedule of Gains or Losses on Inter-company sales of Land for 2023.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Assignment Task Required information Prince Inc. (Prince) purchased 90% of the voting shares of Charming Company (Charming) for $720,000 on July 1, 2020. On that date, Charming’s common shares and retained earnings were valued at $200,000 and $400,000, respectively. Unless otherwise stated, assume that Prince uses the cost method to account for its investment in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1572","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\nPrince's Consolidated Income Statement Assignment - My Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/britainwriters.com\/answers\/princes-consolidated-income-statement-assignment\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Prince's Consolidated Income Statement Assignment - My Blog\" \/>\n<meta property=\"og:description\" content=\"Assignment Task Required information Prince Inc. (Prince) purchased 90% of the voting shares of Charming Company (Charming) for $720,000 on July 1, 2020. On that date, Charming’s common shares and retained earnings were valued at $200,000 and $400,000, respectively. 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