Angela, Inc., holds a 90 percent interest in Corby Company. During 2017, Corby sold inventory costing $125,600 to Angela for $157,000. Of this inventory, $42,800 worth was not sold to outsiders until 2018.
During 2018, Corby sold inventory costing $141,400 to Angela for $202,000. A total of $58,000 of this inventory was not sold to outsiders until 2019.
In 2018, Angela reported separate net income of $220,000 while Corby’s net income was $93,000 after excess amortizations. What is the noncontrolling interest in the 2018 income of the subsidiary?
Presented here are the comparative balance sheets of Hames, Inc., at December 31, 2017 and 2016. Sales for the year ended December 31, 2017, totaled $1,700,000. HAMES, INC. Balance Sheets December 31, 2017 and 2016 2017 2016 Assets Cash $ 63,000 $ 57,000 Accounts receivable 285,000 266,000 Merchandise inventory 261,000 247,000 Total current assets $ 609,000 $ 570,000 Land 109,000 82,000 Plant and equipment 375,000 330,000 Less: Accumulated depreciation (195,000 ) (180,000 ) Total assets $ 898,000 $ 802,000 Liabilities Short-term debt $ 54,000 $ 51,000 Accounts payable 168,000 144,000 Other accrued liabilities 68,000 54,000 Total current liabilities $ 290,000 $ 249,000 Long-term debt 56,000 105,000 Total liabilities $ 346,000 $ 354,000 Stockholders’ Equity Common stock, no par, 200,000 shares authorized, 80,000 and 50,000 shares issued, respectively $ 224,000 $ 162,000 Retained earnings: Beginning balance $ 286,000 $ 217,000 Net income for the year 102,000 84,000 Dividends for the year (60,000 ) (15,000 ) Ending balance $ 328,000 $ 286,000 Total stockholders’ equity $ 552,000 $ 448,000 Total liabilities and Stockholders’ equity $ 898,000 $ 802,000 Required:
a. Calculate ROI for 2017.
b. Calculate ROE for 2017.
(Round your answer to 1 decimal place.)
Top Company holds 90 percent of Bottom Company’s common stock. In the current year, Top reports sales of $810,000 and cost of goods sold of $648,000.
For this same period, Bottom has sales of $310,000 and cost of goods sold of $186,000. During the current year, Top sold merchandise to Bottom for $110,000.
The subsidiary still possesses 50 percent of this inventory at the current year-end. Top had established the transfer price based on its normal gross profit rate. What are the consolidated sales and cost of goods sold?
The difference between the tax base of an asset or liability and its reported amount on the on the SFP is called a future income tax expense, current difference, contemporary difference, permanent difference.
Alabama Corp.’s taxable income differed from its accounting income for 2020. An item that would create permanent difference in accounting and taxable incomes for the corporation would bear balance in the Unearned Rent account at year end making instalment sales during the year.
Using CCA for tax purposes and straight-line depreciation for book purposes. a payment of the golf club dues for the president’s membership.
Baxter Ltd. has made a total of $46,500 in instalments for corporate income tax for calendar 2020, all of which have been debited to Current Tax Expense.
At year end, Dec 31, 2020, the accountant has calculated that the corporation’s actual tax liability is only $43,000. What is the correct adjusting entry to reflect this fact?Dr. Current Tax Expense $43,000, Cr. Income Taxes Payable $43,000Dr. Current Tax Expense $3,500, Cr. Income Taxes Payable $3,500Dr. Income Taxes Payable, $3,500, Cr. Current Tax Expense $3,500Dr. Income Taxes Receivable $3,500, Cr. Current Tax Expense $3,500Question 36Bridgeport Corporation purchased equipment very late in 2020. Based on generous capital cost allowance rates provided in the Income Tax Act, Bridgeport Corporation claimed CCA on its 2020 tax return but did not record any depreciation because the equipment was being tested. This temporary difference will reverse and cause taxable amounts of $26,200 in 2021, $38,600 in 2022, and $45,000 in 2023. Bridgeport’s accounting income for 2020 is $239,600 and the tax rate is 30% for all years. There are no deferred tax accounts at the beginning of 2020.
(a)Calculate the deferred tax balance at December 31, 2020.Deferred tax select an option liabilityasset $enter a dollar amount
The accounting for the items in the numbered list that follows is commonly different for financial reporting purposes than it is for tax purposes.
(a)Match each item in the following list to the number that best describes it:
i. A reversing difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred tax asset
ii. A reversing difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred tax liability
iii. A permanent difference
1. For financial reporting purposes, the straight-line depreciation method is used for plant assets that have a useful life of 10 years. For tax purposes, the CCA declining-balance method is used with a rate of 20%. (ignore the half-year rule.)
A Permanent Difference Deferred Tax Asset Deferred Tax Liability2. A landlord collects rents in advance. Rents are taxable in the period when they are received.
A Permanent Difference Deferred Tax Asset Deferred Tax Liability3. Non-deductible expenses are incurred in obtaining income that is exempt from taxes.
A Permanent Difference Deferred Tax Asset Deferred Tax Liability4. Costs of guarantees and warranties are estimated and accrued for financial reporting purposes.
A Permanent Difference Deferred Tax Asset Deferred Tax Liability5. Instalment sales are accounted for by the accrual method for financial reporting purposes and the cash basis for tax purposes.
A Permanent Difference Deferred Tax Asset Deferred Tax Liability6. For some assets, straight-line depreciation is used for both financial reporting purposes and tax purposes but the assets’ lives are shorter for tax purposes.
A Permanent Difference Deferred Tax Asset Deferred Tax Liability7. Pension expense is reported on the income statement before it is funded. Pension costs are deductible only when they are funded.
A Permanent Difference Deferred Tax Asset Deferred Tax Liability8. Proceeds are received from a life insurance company because of the death of a key officer. (The company carries a policy on key officers.)
A Permanent Difference Deferred Tax Asset Deferred Tax Liability9. The company reports dividends received from taxable Canadian corporations as investment income on its income statement, even though the dividends are non-taxable.
A Permanent Difference Deferred Tax Asset Deferred Tax Liability10. Estimated losses on pending lawsuits and claims are accrued for financial reporting purposes. These losses are tax deductible in the period(s) when the related liabilities are settled.
A Permanent Difference Deferred Tax Asset Deferred Tax Liability11. Security investments accounted for using the FV-NI model are adjusted at the end of the year to their fair value. This is the first year that the company has such investments and the fair value is lower than the cost.
A Permanent Difference Deferred Tax Asset Deferred Tax Liability12. An impairment loss is recorded for goodwill in the current accounting period.
Sunland Corporation provides the following information about its defined benefit pension plan for the year 2020:Current service cost $225,800Contribution to the plan 263,300Past service cost, effective December 31, 2020 25,800Actual return on plan assets 160,000Benefits paid 108,000Net defined benefit liability at January 1, 2020 400,800Plan assets at January 1, 2020 1,600,000Defined benefit obligation at January 1, 2020 2,000,800Interest/discount rate on the DBO and plan assets 10%Sunland follows IFRS.
(a)Prepare continuity schedule for 2020 for the defined benefit obligation
On September 1, 2020, Crane Corporation, which uses ASPE, signed a 7-year, non-cancellable lease for a piece of equipment. The terms of the lease called for Crane to make annual payments of $14,080 at the beginning of each lease year, starting September 1, 2020.
The equipment has an estimated useful life of 9 years and a $12,000 unguaranteed residual value and a fair value on September 1, 2020, of $100,000. The equipment reverts back to the lessor at the end of the lease term.
Crane uses the straight-line method of depreciation for all of its plant assets, has a calendar year end, prepares adjusting journal entries at the end of the fiscal year, and does not use reversing entries.
Crane’s incremental borrowing rate is 12%, and the lessor’s implicit rate is unknown. Click here to view the factor table PRESENT VALUE OF 1.Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF
1.(a)Calculate the PV of the future minimum lease payments using any of the following methods:
(1) factor tables,
(2) a financial calculator, or
(3) Excel functions.
Marigold Ltd. had the following 2020 income statement data:Sales $206,500Cost of goods sold 119,100Gross profit 87,400Operating expenses (includes depreciation of $23,100) 49,600Income before income taxes 37,800Income taxes15,000Net income$22,800
The following accounts increased during 2020 by the amounts shown: Accounts Receivable, $15,000; Inventory, $10,800; Accounts Payable (relating to inventory), $13,800; Taxes Payable, $2,000; and Mortgage Payable, $40,700.
(a)Prepare the cash flows from operating activities section of Marigold’s 2020 statement of cash flows using the indirect method and following IFRS.
A partial trial balance of Lindy Corporation at December 31, 2020, follows: Dr. Cr.Supplies $8,800 Salaries and wages payable $5,800Interest receivable 2,640 Prepaid insurance 113,800 Unearned rent revenue -0-Interest payable 15,600Additional adjusting data:
1. A physical count of supplies on hand on December 31, 2020, totalled $4,300. Through an oversight, the Salaries and Wages Payable account was not changed during 2020. Accrued salaries and wages on December 31, 2020, amounted to $8,000.
2. The Interest Receivable account was also left unchanged during 2020. Accrued interest on investments amounted to $2,000 on December 31, 2020.
3. The unexpired portions of the insurance policies totalled $46,200 as at December 31, 2020.
4. A cheque for $77,000 was received on January 1, 2020, for the rent of a building for both 2020 and 2021. The entire amount was credited to Rent Revenue.
5. Depreciation on equipment for the year was recorded in error as $4,850 rather than the correct figure of $48,500.
6. A further review of prior years’ depreciation calculations revealed that depreciation on equipment of $19,600 had not been recorded.
It was decided that this oversight should be corrected by adjusting prior years’ income. Assume that Lindy applies IFRS.(a)Assuming that the books have not been closed, what adjusting entries are necessary at December 31, 2020? Ignore income tax considerations.
Cullumber Inc. is involved in five separate industries. The following information is available for each of the five industries: Operating Operating Total Profit/ Segment Revenue (Loss) Assets A $142,111 $34,432 $243,418B 40,603 11,019 11,157C 26,392 -6,887 36,513D 192,864 -2,755 49,698E 2,030 689 15,214 $404,000 $36,498 $356,000
(a1)Calculate the minimum reportable segment amount based on the revenue test. Minimum reportable segment amount based on the revenue test
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