Question One (15 marks): FACE , Inc., owns all outstanding stock of KANADA Corporation. Amortization...
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Accounting
Question One (15 marks):
FACE , Inc., owns all outstanding stock of KANADA Corporation. Amortization expense of $15,000 per year for patented technology resulted from the original acquisition. For 2021, the companies had the following account balances:
|
|
| Windsor |
|
| LaSalle |
|
| Sales | $ | 1,100,000 |
| $ | 600,000 |
|
| Cost of goods sold |
| 500,000 |
|
| 400,000 |
|
| Operating expenses |
| 400,000 |
|
| 220,000 |
|
| Investment income |
| Not given |
|
| 0 |
|
| Dividends declared |
| 80,000 |
|
| 30,000 |
|
Intra-entity sales of $320,000 occurred during 2020 and again in 2021. This merchandise cost $240,000 each year. Of the total transfers, $70,000 was still held on December 31, 2020, with $50,000 unsold on December 31, 2021.
- For consolidation purposes, does the direction of the transfers (upstream or downstream) affect the balances to be reported here?
- Prepare a consolidated income statement for the year ending December 31, 2021.
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