Question$1-$Intercompany transactions

On December $31,20$X$0,$ Rita Inc.$($Parent$)$ issued its own

common shares to acquire $100\%$ of the outstanding

voting shares of Jane Corp$($Subsidiary$)$ for $$540,000.$

Rita Inc. uses the cost method to account for its

investment in Jane Corp.

Both companies use the FIFO cost formula to value

their inventories.

$-$Both companies use the straight$-$line method to calculate

all depreciation and amortization.

Both companies pay income tax at the rate of $40\%.$

$(1)$During $20$X$2,$ Rita Inc. sold Jane Corp. some land for

$$320,000.$ Rita Inc.$\text{'}$s carrying amount for the land at

time of sale was $$150,000.$

$(2)$ During $20$X$2,$ Jane Corp.sold Rita Inc. $$100,000$ of

inventory. Jane's cost was $$70,000.$ $$20,000$ of this

inventory remained unsold by Rita Inc. at its December

$31,20$X$2,$ year end.

$(3)$ Jane$($Subsidiary$)$ declared dividends $$45,000$ on

December $26,20$X$2$

Statements of comprehensive income

As at December $31,20$X$2$

Required

a$)$ Identify the type of each intercompany transaction

$($year $20$X$2)$

b$)$ Calculate the following items of consolidated

statement of comprehensive income for the year ended

December $31,20$X$2$

I$)$Consolidated sales revenue

II$)$Consolidated cost of goods sold

III$)$Consolidated depreciation and amortization expense

IV$)$Consolidated income tax expense

V$)$ Consolidated net income