TUGAS PRAKTIKUM AKUNTANSI KEUANGAN LANJUTAN FATA 2016

LAB 7
INTERCOMPANY PROFIT TRANSACTION – PLANT ASSETS

Oil Corporation is an 80 percent subsidiary of Bio Corporation. It was acquired on January

1, 2018, for $24,000,000, at which time Oil’s capital stock and retained earnings were $9,000,000
and $10,250,000 respectively. The difference between fair value and book value is allocated to a
patent with ten-year amortization period. Separate financial statements for Bio and Oil for 2019
are as follows: (in thousand dollars)

Bio Oil
Combined Income and Retained Earnings Statement for the year
ended December 31, 2019
Sales 27,000 11,400
Income from Oil 2,205.4 -
Gain on land 55 -
Gain on Machinery 60 -
Gain on Equipment - 30
Cost of Sales -12,000 -6,000
Other expenses -6,784.4 -2,318
Net Income 10,536 3,112
Add : Beginning retained earnings 12,000 12,000
Less : Dividends -9,000 -1,200
Ending Retained Earnings 13,536 13,912
Statement of Financial Position at December 31, 2019
Cash 8,184 5,640
Account Receivable 10,800 6,000
Dividend Receivable 1,080 -
Inventories 3,600 2,160
Land 6,000 1,800
Equipment-net 4,000 2,112
Building-net 16,800 4,800
Machinery-net 19,800 8,400
Investment in Oil 24,885.4 -
Total Assets 95,149.4 30,912
Account Payable 19,473.4 3,800
Dividend Payable - 1,200

ANA – HESTY – SANDRA – SHINDI FATA 2016

TUGAS PRAKTIKUM AKUNTANSI KEUANGAN LANJUTAN FATA 2016

Other Liabilities 10,200 3,000

Capital Stock 51,940 9,000
Retained Earnings 13,536 13,912
Total Liabilities and Equities 95,149.4 30,912

Additional information:
1. Bio sold inventory items to Oil for $4,000,000 and $5,150,000 during 2018 and 2019
respectively. Oil’s inventories at December 31, 2018 and 2019, include unrealized profits of
$900,000 and $200,000 respectively.
2. Bio sold machinery with a book value of $540,000 to Oil for $600,000 at 1 January 2019. The
machinery has a useful life of six years at the time intercompany sale, and straight line
depreciation is used.
3. At 5 January 2019, Bio sold land that cost $265,000 to Oil for $320,000.
4. At 3 January 2019, Oil sold equipment with book value of $70,000 to Bio for $100,000. The
equipment is depreciated for five-year period using straight-line method.
5. Bio’s account receivable on December 31, 2019, includes $200,000 from Oil.
6. All of Bio’s dividend receivable comes from Oil.

Instruction:
Prepare a consolidation workpaper for Bio Corporation and subsidiary for the year ended
December 31, 2019!

ANA – HESTY – SANDRA – SHINDI FATA 2016