AAA acquired a 70% interest in BBB on January 2, 20x1 for $468,000 when BBB net assets had a book value and fair value of $790,000. During 20x1, AAA sold inventory items that cost $780,000 to BBB for $1,040,000 and BBB's inventory at December 31, 20x1 included 1/2 of the merchandise. BBB also sold to AAA an inventory for $15,000 with a cost of $12,500, 70% were sold to unaffiliated customers. AAA reported separate income from its own operation of $585,000 and BBB reported a net loss of P390,000. Compute for the consolidated net income.
AAA acquired a 70% interest in BBB on January 2, 20x1 for $468,000 when BBB net assets had a book value and fair value of $790,000. During 20x1, AAA sold inventory items that cost $780,000 to BBB for $1,040,000 and BBB's inventory at December 31, 20x1 included 1/2 of the merchandise. BBB also sold to AAA an inventory for $15,000 with a cost of $12,500, 70% were sold to unaffiliated customers. AAA reported separate income from its own operation of $585,000 and BBB reported a net loss of P390,000. Compute for the consolidated net income.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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AAA acquired a 70% interest in BBB on January 2, 20x1 for $468,000 when BBB net assets had a book value and fair value of $790,000. During 20x1, AAA sold inventory items that cost $780,000 to BBB for $1,040,000 and BBB's inventory at December 31, 20x1 included 1/2 of the merchandise. BBB also sold to AAA an inventory for $15,000 with a cost of $12,500, 70% were sold to unaffiliated customers. AAA reported separate income from its own operation of $585,000 and BBB reported a net loss of P390,000. Compute for the consolidated net income.
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