Papal Corporation Acquired an 80% Interest in Sandman Corporation at a Cost

question 14

Essay

Papal Corporation acquired an 80% interest in Sandman Corporation at a cost equal to 80% of the book value of Sandman's net assets in 2010.At the time of the acquisition,the book values and fair values of Sandman's assets and liabilities were equal.During 2011,Papal recorded sales of $440,000 of merchandise to Sandman at a gross profit rate of 30%.Sandman's beginning and ending inventories for 2011 were $60,000 and $80,000,respectively.Income statement information for both companies for 2011 is as follows:
Required:
Prepare a consolidated income statement for Papal Corporation and Subsidiary for 2011.

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Definitions:

Nat Turner's Rebellion

A slave rebellion led by Nat Turner in Virginia in 1831, which resulted in the deaths of dozens of white people and led to harsher laws against slaves.

Nullification Crisis

The 1832 attempt by the State of South Carolina to nullify, or invalidate within its borders, the 1832 federal tariff law. President Jackson responded with the Force Act of 1833.

Prime Field Hand

In historical contexts, especially during slavery in the United States, a term referring to enslaved African Americans who were considered to be the most physically capable and thus assigned to demanding field labor.

Slaveholding Class

Refers to the segment of society that owned slaves, primarily found in societies with agrarian economies where slave labor was used for agricultural production.