Poole Company Owns a 90% Interest in Solumbra Company

question 28

Essay

Poole Company owns a 90% interest in Solumbra Company.The consolidated income statement drafted by the controller of Poole Company appeared as follows:
During your audit you discover that intercompany sales transactions were not reflected in the controller's draft of the consolidated income statement.Information relating to intercompany sales and unrealized intercompany profit is as follows:
Required:
Prepare a corrected consolidated income statement for Poole Company and Solumbra Company for the year ended December 31,2017.

Understand and apply the concepts of time value of money to calculate present and future values of various financial instruments.

Calculate the value of annuities and perpetuities, including ordinary annuities, annuities due, deferred annuities, and perpetuities given different compounding frequencies.

Determine the size and duration of payments needed to fund specific financial goals, including retirement savings, loan repayments, and savings for education or other future expenses.

Analyze different investment options and their returns, including comparing annuity quotes from different companies.

---

Definitions:

Face Value

The nominal or dollar value printed on a bond or a stock certificate, representing the amount due to the holder at maturity.

Straight-Line Amortization

A method of evenly spreading the cost of an intangible asset over its useful life.

Bond Premium Amortization

The gradual expense recognition over time of the premium paid above the par value for a bond.

Interest Expense

The cost incurred by an entity for borrowed funds, reflected as a charge against earnings.