Preen Corporation acquired a 60% interest in Shino Corporation at a cost equal to 60% of the book value of Shino's net assets in 2014. At the time of acquisition, the book value and fair value of Shino's assets and liabilities were equal. During 2015, Preen sold $120,000 of merchandise to Shino. All intercompany sales are made at 150% of Preen's cost. Shino's beginning and ending inventories resulting from intercompany sales for 2015 were $60,000 and $36,000, respectively. Income statement information for both companies for 2015 is as follows:
Required:
Prepare a consolidated income statement for Preen Corporation and Subsidiary for 2015.

Question

Preen Corporation acquired a 60% interest in Shino Corporation at a cost equal to 60% of the book value of Shino's net assets in 2014. At the time of acquisition, the book value and fair value of Shino's assets and liabilities were equal. During 2015, Preen sold $120,000 of merchandise to Shino. All intercompany sales are made at 150% of Preen's cost. Shino's beginning and ending inventories resulting from intercompany sales for 2015 were $60,000 and $36,000, respectively. Income statement information for both companies for 2015 is as follows:
  Required:
Prepare a consolidated income statement for Preen Corporation and Subsidiary for 2015.

Quizplus · Accepted Answer

The Answer of Preen Corporation acquired a 60% interest in Shino Corporation at a cost equal to 60% of the book value of Shino's net assets in 2014. At the time of acquisition, the book value and fair value of Shino's assets and liabilities were equal. During 2015, Preen sold $120,000 of merchandise to Shino. All intercompany sales are made at 150% of Preen's cost. Shino's beginning and ending inventories resulting from intercompany sales for 2015 were $60,000 and $36,000, respectively. Income statement information for both companies for 2015 is as follows:
  Required:
Prepare a consolidated income statement for Preen Corporation and Subsidiary for 2015.

Preen Corporation Acquired a 60% Interest in Shino Corporation at a Cost