Akron Toledo Sales ... Cost of goods sold Operating expenses Investment income Dividends declared $1,100,000 500,000 $600,000 400,000 220,000 Not given 80,000 30,000
Akron Toledo Sales ... Cost of goods sold Operating expenses Investment income Dividends declared $1,100,000 500,000 $600,000 400,000 220,000 Not given 80,000 30,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Akron, Inc., owns all outstanding stock of Toledo Corporation. Amortization expense of $15,000 per year for patented technology resulted from the original acquisition. For 2018, the companies had the following account balances:
Intra-entity sales of $320,000 occurred during 2017 and again in 2018. This merchandise cost $240,000 each year. Of the total transfers, $70,000 was still held on December 31, 2017, with $50,000 unsold on December 31, 2018.
a. For consolidation purposes, does the direction of the transfers (upstream or downstream) affect the balances to be reported here?
b. Prepare a consolidated income statement for the year ending December 31, 2018.
Transcribed Image Text:Akron
Toledo
Sales ...
Cost of goods sold
Operating expenses
Investment income
Dividends declared
$1,100,000
500,000
$600,000
400,000
220,000
Not given
80,000
30,000
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