Strayten Corp

question 122

Essay

Strayten Corp.is a wholly owned subsidiary of Quint Inc.Quint decided to use the initial value method to account for this investment.During 2018, Strayten sold Quint goods, which had cost $48,000.The selling price was $64,000.Quint still had one-eighth of the goods purchased from Strayten on hand at the end of 2018.
Required:
Prepare Consolidation Entry *G, which would have to be recorded at the end of 2019.

Understand the similarities between the riskiness of leasing and other cash flows of the lessee.

Analyze the impact of both financial and operating leases on a firm’s balance sheet.

Identify optimal financing strategies for equipment acquisition based on tax considerations.

Determine the appropriate discount rate for lease-purchase analysis.

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Definitions:

Percentage-Of-Completion

An accounting method that recognizes revenues and gross profit on long-term contracts in proportion to the work completed to date.

Gross Profit

The difference between sales revenue and the cost of goods sold, representing the basic profitability of the sales of goods and services.

Construction Costs

Expenses incurred during the process of building structures, infrastructure, or other significant physical assets, including materials, labor, and overhead.

Service Cost

The expense recognized by an employer for the portion of an employee's pension or post-retirement plan earned during the year.