Patch Corporation accounts for the investment in its 70%-owned subsidiary, Scalar Company, by the equity method. Amounts in the financial statements of the two companies for the fiscal year ended December 31, 2006, after closing entries, included the following:
Working paper eliminations for the consolidated financial statements of Patch Corporation and subsidiary included the following intercompany profit items:
Prepare a working paper to compute the following:
a. Consolidated net income for the year ended December 31, 2006
b. Consolidated retained earnings, December 31, 2006

Question

Patch Corporation accounts for the investment in its 70%-owned subsidiary, Scalar Company, by the equity method. Amounts in the financial statements of the two companies for the fiscal year ended December 31, 2006, after closing entries, included the following:
  Working paper eliminations for the consolidated financial statements of Patch Corporation and subsidiary included the following intercompany profit items:
  Prepare a working paper to compute the following:
a. Consolidated net income for the year ended December 31, 2006
b. Consolidated retained earnings, December 31, 2006

Quizplus · Accepted Answer

The Answer of Patch Corporation accounts for the investment in its 70%-owned subsidiary, Scalar Company, by the equity method. Amounts in the financial statements of the two companies for the fiscal year ended December 31, 2006, after closing entries, included the following:
  Working paper eliminations for the consolidated financial statements of Patch Corporation and subsidiary included the following intercompany profit items:
  Prepare a working paper to compute the following:
a. Consolidated net income for the year ended December 31, 2006
b. Consolidated retained earnings, December 31, 2006

Patch Corporation Accounts for the Investment in Its 70%-Owned Subsidiary