Course material

1. Account 302
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
PentopCorporation, acquired for $ 240,000 on January 1,
2021. (6 Marks)• Investment Cost
was equal to book value and fair value.• Suntop’s net income in 2021 was $ 60,000 and
Pentop’sincome, excluding its income from Suntop, was 80,000.• Pentop’s income includes a
$ 12,000 unrealized gain on land that cost $ 42,000 and was sold to Suntop for $ 54,000.•
Assume that Suntop sold the land in 2023 for $ 60,000. • Assume 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 nation’s currency. 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)