Patti Corp.has several subsidiaries (Aeta, Beta, and Gaeta) that are included in its consolidated financial statements.In its 12/31/16 separate balance sheet, Patti had the following intercompany balances before eliminations:
$$\begin{array} { l r r }
& \text { Debit } & \text { Credit } \
\text { Current Receivable due from Aeta } & \$ 40,000 & \
\text { Noncurrent Receivable due from Beta } & 100,000 & \
\text { Cash Advance to Beta } & 26,000 & \
\text { Cash Advance from Gaeta } & & \$ 75,000 \
\text { Intercompany Payable to Gaeta } & & 40,000
\end{array}$$ In its 12/31/16 consolidated balance sheet, what amount should Patti report as intercompany receivables?
A)$166,000
B)$51,000
C)$26,000
D)$0

Question

Patti Corp.has several subsidiaries (Aeta, Beta, and Gaeta) that are included in its consolidated financial statements.In its 12/31/16 separate balance sheet, Patti had the following intercompany balances before eliminations: 
$$\begin{array} { l r r } 
& \text { Debit } & \text { Credit } \
\text { Current Receivable due from Aeta } & \$ 40,000 & \
\text { Noncurrent Receivable due from Beta } & 100,000 & \
\text { Cash Advance to Beta } & 26,000 & \
\text { Cash Advance from Gaeta } & & \$ 75,000 \
\text { Intercompany Payable to Gaeta } & & 40,000
\end{array}$$ In its 12/31/16 consolidated balance sheet, what amount should Patti report as intercompany receivables?
A)$166,000
B)$51,000
C)$26,000
D)$0

Quizplus · Accepted Answer

In consolidated financial statements, all intercompany balances and transactions between the parent company and its subsidiaries are eliminated. This includes receivables and payables among the entities. Therefore, Patti should report $0 as intercompany receivables in its consolidated balance sheet.

Patti Corp In Its 12/31/16 Consolidated Balance Sheet, What Amount Should Patti