Assume that a parent company owns a 100% controlling interest in its long-held subsidiary. During the...

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Assume that a parent company owns a 100% controlling interest in its long-held subsidiary. During the year ended December 31, 2013, the parent and subsidiary had "stand alone" (i.e., before any equity method adjustments) pre-consolidation income equal to $300,000 and $160,000, respectively. During the year ended December 31, 2012, the parent sold $50,000 of merchandise to the subsidiary. During the year ended December 31, 2013, the parent sold $40,000 of merchandise to the subsidiary. On December 31, 2012 and 2013, the subsidiary's ending inventory included $15,000 and $12,000, respectively, of merchandise purchased from the parent. The parent company realizes profits of 30% of selling price on intercompany transactions. What is the amount of the parent's consolidated net income for the year ending December 31, 2013? Assume that a parent company owns a 100% controlling interest in its long-held subsidiary. During the year ended December 31, 2013, the parent and subsidiary had "stand alone" (i.e., before any equity method adjustments) pre-consolidation income equal to $300,000 and $160,000, respectively. During the year ended December 31, 2012, the parent sold $50,000 of merchandise to the subsidiary. During the year ended December 31, 2013, the parent sold $40,000 of merchandise to the subsidiary. On December 31, 2012 and 2013, the subsidiary's ending inventory included $15,000 and $12,000, respectively, of merchandise purchased from the parent. The parent company realizes profits of 30% of selling price on intercompany transactions. What is the amount of the parent's consolidated net income for the year ending December 31, 2013?

Answer rating: 100% (QA)

First we need to adjust the subsidiarys income for the intercompany sales of merchandise In 2012 the ... View the full answer