MGT223H5 Study Guide - Midterm Guide: Buyout, Retained Earnings, Income Statement

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24 Dec 2015
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On january 1, 20x1, p-company bought 80% of the common shares of b-company, b- Company bought 70% of the common shares of c-company and c-company bought 25% of the common shares of d-company. The companies account for control investment using the cost method. C-company"s investment in d-company is considered a significant influence investment. The following acquisition differentials stem from the above transactions (all amortized on a straight-line basis over 10 years): The four companies sold merchandise to each other during 20x1. Intercompany sales and unrealized before-tax profits from these sales are: Each company paid tax at an effective rate of 40%. Below are the companies" individual statements of comprehensive income for the year ended. Required: consolidated income statement for 20x1, consolidated retained earnings, non-controlling interest in the consolidated balance sheet. Sales (100,000 + 100,000 + 100,000 23,000 22,000) Cost of goods sold (50,000 + 50,000 + 50,000 - 23,000 22,000 + 7,000.

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