Assume that a wholly owned subsidiary sells inventory to the parent company. The parent company, ultimately,...

 

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Assume that a wholly owned subsidiary sells inventory to the parent company. The parent company, ultimately, sells the inventory to customers outside of the consolidated group. You have compiled the following data for the years ending 2018 and 2019: 2019 2018 Subsidiary Net Intercompany Income $ $900,000 $720,000 Inventory Sales Gross Profit % $135,000 $108,000 30% 35% % Inventory Remaining at Receivable End of Year (Payable) $45,000 20% 15% $36,000 Assume that inventory not remaining at the end of the year was sold outside of the consolidated group during the year. The subsidiary paid $540,000 in dividends during 2019. a. How much Income (loss) from subsidiary should the parent report in its pre-consolidation income statement the year ending 2019 assuming that it uses the cost method of accounting for its Equity Investment? b. Prepare the required [I] consolidation entries for 2019. Assume that a wholly owned subsidiary sells inventory to the parent company. The parent company, ultimately, sells the inventory to customers outside of the consolidated group. You have compiled the following data for the years ending 2018 and 2019: 2019 2018 Subsidiary Net Intercompany Income $ $900,000 $720,000 Inventory Sales Gross Profit % $135,000 $108,000 30% 35% % Inventory Remaining at Receivable End of Year (Payable) $45,000 20% 15% $36,000 Assume that inventory not remaining at the end of the year was sold outside of the consolidated group during the year. The subsidiary paid $540,000 in dividends during 2019. a. How much Income (loss) from subsidiary should the parent report in its pre-consolidation income statement the year ending 2019 assuming that it uses the cost method of accounting for its Equity Investment? b. Prepare the required [I] consolidation entries for 2019.

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a Subsidiary Share of Profit Income for the Period Intercompany sa... View the full answer