Additional Information: Panda sold inventory to Sanda for


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Additional Information: Panda sold inventory to Sanda for $500,000 during 2014 and for $800,000 during 2015. Sanda’s inventories at 12/31/14 and 12/31/15 included unrealized inter-company gross profits of $120,000 and $150,000, respectively. On January 2, 2014, Panda sold machinery with a book value of $220,000 to Sanda for $280,000. The machinery had a useful remaining life at that time of 4 years and straight-line depreciation is used by both firms. During 2015, Sanda sold land with a book value of $75,000 to Panda for $125,000. Panda still held the land at the end of 2015. Panda’s accounts receivable on 12/31/15 include $65,000 due from Sanda. Panda uses the complete equity method for its 70% ownership interest in Sanda. Required: Compute the total AAP implied by Panda’s acquisition of Sanda stock on 1/1/2014. Reconcile the beginning balance in Equity Investment (i.e., $2,100,000) to the amount shown in the balance sheet at December 31, 2015. Prepare a consolidation spreadsheet for the year ended December 31, 2105 for Panda and its subsidiary similar to the one shown in Exhibit 5.13 on p. 265 of the textbook (colors not required). Any required consolidation (elimination) entries can be entered directly into the spreadsheet (i.e., there is no need to present the consolidation entries separately in general journal form). (Note: Ignore income taxes throughout this simulation.) ATTACHMENT PREVIEW Download attachment Panda Sanda.docx Panda Sanda Combined Income and Retained Earnings Statement for Year ended December 31, 2015 Sales Equity income Gain on sale of land Cost of goods sold Operating expenses Net income Add: Retained earnings, January 1 Less: Dividends Retained earnings, December 31 Balance Sheet at December 31, 2015 Cash Accounts receivable Inventories Equity investment Land Buildings-net Machinery-net Accounts payable Other liabilities Common stock Additional paid-in capital Retained earnings $ 4,500,000 328,000 –(2,000,000) (1,130,000) $ 1,698,000 2,000,000 (1,500,000) $ 2,198,000 $ 1,900,000 –50,000 (950,000) (400,000) $ 600,000 1,200,000 (200,000) $ 1,600,000 $ 1,544,000 1,800,000 600,000 2,291,000 1,000,000 2,800,000 3,300,000 $13,335,000 $ 140,000 1,000,000 360,000 —300,000 800,000 1,400,000 $ 4,000,000 $ 1,737,000 1,400,000 1,200,000 6,800,000 2,198,000 $13,335,000 $ 500,000 400,000 700,000 800,000 1,600,000 $ 4,000,000 Read more ChancellorBraverySquirrel7622
posted a question · Jun 03, 2016 at 8:56pm

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