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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Assume a parent company acquired its subsidiary on January 1, 2016. On January 1, 2016, the subsidiary’s
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