Harley Corporation - Case Study - Accounting and Finance Assignment Help

Assignment Task:

Task:

Question 1

Harley Corporation owns 70% of the outstanding voting stock of Forbes Inc. At the date of Acquisition, Forbes’s retained earnings were $1,800,000. On December 31, Year 2, Harley sold equipment to Forbes at its fair value of $1,500,000 and recorded a gain of $500,000. The equipment had a remaining useful life of four years on the date of the intercompany transaction. This equipment was still held within the consolidated entity at the end of Year 4.

A the end of Year 4, selected figures from the two companies’ financial statements were as follows:

Harley Forbes
Equipment $6,000,000 $3,000,000
Accumulated depreciation

1,700,000 1,450,000

Retained earnings, beginning of year

4,000,000 2,000,000
Depreciation expense 600,000 510,000
Net income 1,200,000 420,000
Dividends declared 250,000 80,000

Hurley uses the cost method to account for its investment in Forbes. Both companies pay income tax at the rate of 30%.

Required:
a) Calculate the amount to be reported on the Year 4 consolidated financial statements for the accounts / items listed above.
b) Now, assume that the Year 2 intercompany sale was upstream, that is, Forbes sold to Harley. Calculate the amount to be reported on the Year 4 consolidated financial statements for the accounts/ items listed above.

Question 2

Parent Co. owns 80% of Sub co. and uses the cost method for its investment. The following are summarized income statements for the year ended December 31, year 6.

Question 3

In your own words explain the following:

1. Why the Retained Earnings of the parent using the equity method will equal the Consolidated Retained Earnings.
2. Why we need to calculate beginning Retained Earnings and beginning NCI when preparing consolidated financial statements using the worksheet method.

This Accounting and Finance Assingment has been solved by our Accounting and Finance Experts at My Uni Paper. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.

Be it a used or new solution, the quality of the work submitted by our assignment experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose a new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.