1) The following intercompany transactions occurred during the year: (5 Marks)
a) Parent loaned $ _____ to Subsidiary. To keep things simple, assume that there is no
interest revenue or interest expense associated with this loan.
b) Parent made a sale to Subsidiary for $ ______ cash. The inventory had originally cost
Parent $ ____. Subsidiary then sold that same inventory to an outsider for $ _______.
c) Parent made a sale to Subsidiary for $_____ cash. The inventory had originally cost
Parent $____. Subsidiary has not yet sold that same inventory to an outsider.
What consolidation worksheet entries would you make?
Note: Assume you own figures wherever required.
2) Suntop Corporation is an 80% owned subsidiary of Pentop Corporation, acquired for $ 240,000 on
January 1, 2021.
(6 Marks)
‰nvestment Cost was equal to book value and fair value.
“untopànet income in 2021 was $ 60,000 and Pentopàincome, excluding its income from
Suntop, was 80,000.
entopàincome includes a $ 12,000 unrealized gain on land that cost $ 42,000 and was sold
to Suntop for $ 54,000.
ssume that Suntop sold the land in 2023 for $ 60,000.
ssume Pentop adjust for this transaction in the equity accounts.
Required:
1) What Entries would Pentop make in 2021 and 2023?
2) Prepare the Consolidation Entries at December 31, 2021, December 31, 2022 and December 31,
2023.
3) Exchange rates change because of a number of economic factors affecting the supply of and demand
for a nationàcurrency. What are the factors that cause change in exchanges rates of currency of a
country? State and Explain any four of these factors.
(4 Marks)

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