a) A parent loaned _____ US dollars to an affiliate. To make things simple, assume that there is no interest income or interest expense associated with this loan.

b) A parent sells to the affiliate for ______ dollars in cash. The cost of inventory originally originated ____ $. The subsidiary then sells the same inventory to an outsider for _______ dollars.

c) A parent sells to the affiliate for _____ dollars in cash. The cost of inventory originally originated ____ $. The subsidiary has not sold this same inventory to a third party.

What merge worksheet entries will you be making?

Note: assume you have numbers where required.

2) Suntop Corporation is an 80% owned subsidiary of Pentop Corporation, acquired for $240,000 on January 1, 2021. (6 Marks).

• The cost of the investment is equal to the carrying value and the fair value.
• Suntop’s net income was $60,000 in 2021, and Bentop’s income was $80,000, excluding her income from Suntop.
• Pentop’s income includes an unrealized gain of $12,000 on land that cost $42,000 and was sold to Suntop for $54,000.
• Suppose Suntop sells the land in 2023 for $60,000.
• Suppose Pentop configures this transaction in stock accounts.

wanted:

1) What entries will Pentop be making in 2021 and 2023?

2) Prepare the consolidation entries for December 31, 2021, December 31, 2022 and December 31, 2023.

3) Exchange rates change due to a number of economic factors that affect supply and demand for a country’s currency. What are the factors that cause a change in the currency exchange rates of a country? List and explain any four of these factors. (4 marks)