Question

. Pole Company acquired 80 percent ownership of South Company's voting shares on January 1, 20X8, at underlying book value. The fair value of the noncontrolling interest on that date was equal to 20 percent of the book value of South Company. During 20X8, Pole purchased inventory for $30,000 and sold the full amount to South Company for $50,000. On December 31, 20X8, South's ending inventory included $10,000 of items purchased from Pole. Also in 20X8, South purchased inventory for $80,000 and sold the units to Pole for $100,000. Pole included $30,000 of its purchase from South in ending inventory on December 31, 20X8. Summary income statement data for the two companies revealed the following: (14 points) Pole Company South Company Sales $ 300,000 $ 172,000 Income from Subsidiary 39,000 $ 339,000 $ 172,000 Cost of Goods Sold $ 190,000 $ 110,000 Other Expenses 45,000 29,000 Total Expenses $ (235,000 ) $ (139,000 ) Net Income $ 104,000 $ 33,000

1). Compute the amount to be reported as sales in the 20X8 consolidated income statement. (3 points)

2). Compute the amount to be reported as cost of goods sold in the 20X8 consolidated income statement. (3 points)

3). What amount of income will be assigned to the noncontrolling shareholders in the 20X8 consolidated income statement? (3 points)

4). What amount of income will be assigned to the controlling interest in the 20X8 consolidated income statement? (5 points

Answer 1