JESSIE Co. purchased 95% of the stock of CODY Co. on January 2013. On that date, the book value of CODY's net assets approximated fair value. As a result of the purchase, JESSIE recognized $75,000 worth of goodwill. On the same year, CODY sold inventory to JESSIE Co. On December 31, 2013, CODY had unrealized profits on its books of $12,500. By December 31, 2014, the entire inventory left on JESSIE's books had been sold to outside parties. During 2014, JESSIE sold inventory to CODY and had $18,750 unrealized profits left on its books at the end of 2014. For 2014, operating income of JESSIE Co. and CODY Co. are 590,000 and 450,000, respectively. Compute for the consolidated net income.
JESSIE Co. purchased 95% of the stock of CODY Co. on January 2013. On that date, the book value of CODY's net assets approximated fair value. As a result of the purchase, JESSIE recognized $75,000 worth of
On the same year, CODY sold inventory to JESSIE Co. On December 31, 2013, CODY had unrealized profits on its books of $12,500.
By December 31, 2014, the entire inventory left on JESSIE's books had been sold to outside parties. During 2014, JESSIE sold inventory to CODY and had $18,750 unrealized profits left on its books at the end of 2014. For 2014, operating income of JESSIE Co. and CODY Co. are 590,000 and 450,000, respectively.
Compute for the consolidated net income.
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