Advanced Accounting Essay

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1.Pratt Company owns 80% of Storey Company’s common stock. During 2008, Storey sold $400,000 of merchandise to Pratt. At December 31, 2008, one-third of the merchandise remained in Pratt’s inventory. In 2008, gross profit percentages were 25% for Pratt and 30% for Storey. The amount of unrealized intercompany profit that should be eliminated in the consolidated statements is 2.Pratt Company owns 80% of Storey Company’s common stock. During 2008, Storey sold $400,000 of merchandise to Pratt. At December 31, 2008, one-third of the merchandise remained in Pratt’s inventory. In 2008, gross profit percentages were 25% for Pratt and 30% for Storey. The amount of cost of goods sold in the consolidated statements is 3.Sales from a parent to a subsidiary are called

4.Sales from to parent to from subsidiary are called
5.Sales from a subsidiary to are called
6.In determining controlling interest in consolidated income in the consolidated financial statements, unrealized intercompany profit on inventory acquired by a parent from its subsidiary should 7.P Company acquired an 70% interest in S Company on January 1, 2011, for $270,000 cash when S Company had common stock of $150,000 and retained earnings of $150,000. All excess was attributable to plant assets with a 10 year life. S Company made $30,000 in 2011 and paid no dividends. P Company’s separate income in 2011 was $375,000. Excess depreciation expense in 2011 was 8.P Company acquired an 70% interest in S Company on January 1, 2011, for $270,000 cash when S Company had common stock of $150,000 and retained earnings of $150,000. All excess was attributable to plant assets with a 10 year life. S Company made $30,000 in 2011 and paid no dividends. P Company’s separate income in 2011 was $375,000. Excess depreciation expense in 2011 was 9.P Company acquired an 70% interest in S Company on January 1, 2011, for $270,000 cash when S Company had common stock of $150,000 and retained earnings of $150,000. All excess was attributable to plant assets with a 10 year life. Excess depreciation expense in 2011 was $15,000. S Company made $30,000 in 2011 and paid no dividends. P Company’s separate income in 2011 was $375,000. Controlling interest in consolidated net income for 2011 is

10.Noncontrolling interest in consolidated income is never affected by

Use the following information for Questions 11-14. P Company owns an 70% interest in S Company. During 2011, S sells merchandise to P for $140,000 at a profit of $30,000. During 2011, P Company resells 60% of the merchandise for $165,000. Income statements for P and S are summarized below:

P __ S__
Sales$165,000$140,000
Cost of Sales (84,000) (110,000)
Gross Profit (2011)$ 81,000 $ 30,000

11.Controlling interest in consolidated net income for 2011 is
12.Noncontrolling interest in income for 2011 is
13.Consolidated sales for 2011 is
14.Consolidated cost of sales for 2011 is

Use the following exchange rates in multiple choice questions 15 through 24.

| November 20, 2010| December 20, 2010| December 31, 2010| January 20, 2011| | | | | |
USD / EUR| 0.9900| 0.8750| 0.8950| 0.9750|
| | | | |
EUR / USD| 1.0101| 1.1429| 1.1173| 1.0256|
| | | | |

15.Freeman Company is a US company that purchased €100,000 of inventory on November 20, 2010. If Freeman paid for the inventory on December 20, 2010, what is the foreign currency gain/loss reported on the income statement in 2010?

16.Freeman sold all of the inventory in 2010 that it purchased for €100,000 on November 20, 2010. What was their cost of goods sold related to this inventory?

17.Freeman Company purchased €100,000 of inventory on November 20, 2010. If Freeman paid for the inventory on January 20, 2011, what is the foreign currency gain/loss reported on the income statement in 2010?

18.Freeman Company...
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