Assume a parent company acquired its subsidiary on January 1, 2016. On January 1, 2016, the subsidiary's retained earnings was $637,500. During the year ended December 31, 2019, the subsidiary sold $ 100,000 of inventory to its parent, of which $30,000 remains unpaid at December 31, 2019. Deferred profit at December 31, 2018, equaled $12,000, with all of these inventories sold to unaffiliated companies in 2019. Deferred profit at December 31, 2019, equals $22,400. The parent uses the cost method of pre- consolidation Equity Investment book-keeping. The subsidiary's retained earnings on January 1, 2019 and December 31, 2019 are $775,000 and $955,000, respectively. Calculate the amount of the [ADJ] consolidation entry to be included in the 2019 consolidation worksheet.
Assume a parent company acquired its subsidiary on January 1, 2016. On January 1, 2016, the subsidiary's retained earnings was $637,500. During the year ended December 31, 2019, the subsidiary sold $ 100,000 of inventory to its parent, of which $30,000 remains unpaid at December 31, 2019. Deferred profit at December 31, 2018, equaled $12,000, with all of these inventories sold to unaffiliated companies in 2019. Deferred profit at December 31, 2019, equals $22,400. The parent uses the cost method of pre- consolidation Equity Investment book-keeping. The subsidiary's retained earnings on January 1, 2019 and December 31, 2019 are $775,000 and $955,000, respectively. Calculate the amount of the [ADJ] consolidation entry to be included in the 2019 consolidation worksheet.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 2P
Related questions
Question
![Assume a parent company acquired its subsidiary on
January 1, 2016. On January 1, 2016, the subsidiary's
retained earnings was $637,500. During the year
ended December 31, 2019, the subsidiary sold $
100,000 of inventory to its parent, of which $30,000
remains unpaid at December 31, 2019. Deferred
profit at December 31, 2018, equaled $12,000, with
all of these inventories sold to unaffiliated companies
in 2019. Deferred profit at December 31, 2019, equals
$22,400. The parent uses the cost method of pre-
consolidation Equity Investment book-keeping. The
subsidiary's retained earnings on January 1, 2019 and
December 31, 2019 are $775,000 and $955,000,
respectively. Calculate the amount of the [ADJ]
consolidation entry to be included in the 2019
consolidation worksheet.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7dfdbbd2-cb13-4b6c-acb3-c2553e9ca860%2F4397b8c9-9233-4a5e-8656-c6331aa1abd3%2Fejn62qu_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Assume a parent company acquired its subsidiary on
January 1, 2016. On January 1, 2016, the subsidiary's
retained earnings was $637,500. During the year
ended December 31, 2019, the subsidiary sold $
100,000 of inventory to its parent, of which $30,000
remains unpaid at December 31, 2019. Deferred
profit at December 31, 2018, equaled $12,000, with
all of these inventories sold to unaffiliated companies
in 2019. Deferred profit at December 31, 2019, equals
$22,400. The parent uses the cost method of pre-
consolidation Equity Investment book-keeping. The
subsidiary's retained earnings on January 1, 2019 and
December 31, 2019 are $775,000 and $955,000,
respectively. Calculate the amount of the [ADJ]
consolidation entry to be included in the 2019
consolidation worksheet.
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