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Subsequent To Acquisition Quiz 3

The income statements of Brimstone Company, the parent, and its 80% owned subsidiary Phoenix Company are presented showing Brimstone with sales of $10 million, cost of sales of $7 million, and operating income of $930,000 while Phoenix has sales of $3 million, cost of sales of $2.34 million, and operating income of $400,000. Additional information is provided on intercompany transactions between Brimstone and Phoenix to calculate consolidated financial statements.

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243 views1 page

Subsequent To Acquisition Quiz 3

The income statements of Brimstone Company, the parent, and its 80% owned subsidiary Phoenix Company are presented showing Brimstone with sales of $10 million, cost of sales of $7 million, and operating income of $930,000 while Phoenix has sales of $3 million, cost of sales of $2.34 million, and operating income of $400,000. Additional information is provided on intercompany transactions between Brimstone and Phoenix to calculate consolidated financial statements.

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John Balanquit
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At the end of the current year, Brimstone Company, the parent, and Phoenix Company, the subsidiary

presented the following income statement items:

Brimstone Phoenix
Sales 10,000,000.00 3,000,000.00
Cost of Sales 7,000,000.00 2,340,000.00
Gross Profit 3,000,000.00 660,000.00
Other Income 180,000.00 120,000.00
Operating Expenses 2,150,000.00 380,000.00
Operating Income 930,000.00 400,000.00

Additional Information:

 Brimstone owns 80% interest in Phoenix


 The balance of the NCI at the beginning of the year is 250,000.
 There are no interest expenses and income tax will be ignored.
 1,000,000 of Brimstone’s sales pertain to those sold to Phoenix. 25% of these items are still held
by Phoenix at year-end.
 250,000 of Phoenix’ sales were made to Brimstone. All of these items, except for 50,000, was
sold to outsiders at the end of the year.
 100,000 of Brimstone’s beginning inventory was from those sold by Phoenix last period. Phoenix
has no intercompany sales with Brimstone last year.
 100,000 of Brimstone’s Other Income is from dividends paid by Phoenix. The remaining was
from a gain on sale of equipment to Phoenix at the end of the current year. The equipment has
4 years left before being retired.
 The Other Income of Phoenix is from a sale of land to Brimstone.

1. How much is the Consolidated Sales?


2. How much is the Consolidated Gross Profit?
3. How much is the Adjusted Net Income of Brimstone?
4. How much is the Adjusted Net Income of Phoenix?
5. How much is the Consolidated Net Income?
6. How much is the Consolidated Net Income Attributable to the Parent?
7. How much is the Consolidated Net Income Attributable to the NCI?
8. How much is the ending balance of the NCI?

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