Question 1. X-Beams Inc. owned 70% of the voting common stock of Kent Corp. During 2006, Kent made several sales of inventory to X-Beams. The total selling price was $180,000 and the cost was $100,000. At the end of the year, 20% of the goods were still in X-Beams' inventory. Kent's reported net income was $300,000 in 2006 and in 2007.
Assuming inventory is no longer sold by Kent to X-Beans do the following:
A. For 2006 and 2007 make the eliminations required for the consolidation of the the corporation. That is the TI, G, and *G.
B. Compute the realized income of Kent for 2006 and 2007 and compute the non-controlling interest income for 2006 and 2007 that would go in the non-controlling interest column on the consolidated work papers in the income statement section.
Question 2. Justings Co. owned 80% of Evana Corp. During 2006, Justings sold to Evana land with a book value of $48,000. The selling price was $70,000.
A. Create the eliminations regarding this transaction for 2006 and 2007, TL and *TL.
Question 3. On January 1, 2006, Payton Co. sold equipment to its subsidiary, Starker Corp., for $115,000. The equipment had cost $125,000, and the balance in accumulated depreciation was $45,000. The equipment had an estimated remaining useful life of eight years and $0 salvage value. Both companies use straight-line depreciation. On their separate 2006 income statements, Payton and Starker reported depreciation expense of $84,000 and $60,000, respectively.
A. Create the eliminations for consolidation due to the following transaction for 2006 and 2009. That would be TA, ED, *TA, and *ED,
B. What is the amount of depreciation on the 2006 consolidated income statement?