On December 31, 2023, Powder Corporation acquired 100% of the common shares of Talc Corporation. There were no fair value differences or goodwill resulting from this transaction. The following information s extracts from the December 31, 2026 for Powder and Talc: Net income Dividends Property, plant, and equipment (net) Inventory Additional information: $667,000 $618,400 $ ● On December 31, 2024, Powder sold a piece of equipment to Talc, recording a profit of $250,000. At that time, the estimated useful life of the equipment of 10 years. $661,600 Powder 1,950,000 ► In 2025, Talc sold $250,000 in inventory to Powder. At the end of 2025, Powder still held 22% of the inventory. In 2026, Talc sold $300,000 in inventory to Powder. Powder still held 30% of the inventory at the end of 2026. Talc earns 50% gross profit on all of its inventory sales. - Powder uses the cost method to account for its investment in Talc. Both companies pay tax at a rate of 20%. What is the inventory amount that would be recorded on the December 31, 2026, consolidated statement of financial position? $613,000 250,000 595,000 375,000 Talc $1,100,000 125,000 850,000 265,000

On December 31, 2023, Powder Corporation acquired 100% of the common shares of Talc Corporation. There were no fair value differences or goodwill resulting from this transaction. The following information s extracts from the December 31, 2026 for Powder and Talc: Net income Dividends Property, plant, and equipment (net) Inventory Additional information: $667,000 $618,400 $ ● On December 31, 2024, Powder sold a piece of equipment to Talc, recording a profit of $250,000. At that time, the estimated useful life of the equipment of 10 years. $661,600 Powder 1,950,000 ► In 2025, Talc sold $250,000 in inventory to Powder. At the end of 2025, Powder still held 22% of the inventory. In 2026, Talc sold $300,000 in inventory to Powder. Powder still held 30% of the inventory at the end of 2026. Talc earns 50% gross profit on all of its inventory sales. - Powder uses the cost method to account for its investment in Talc. Both companies pay tax at a rate of 20%. What is the inventory amount that would be recorded on the December 31, 2026, consolidated statement of financial position? $613,000 250,000 595,000 375,000 Talc $1,100,000 125,000 850,000 265,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A-7

3
On December 31, 2023, Powder Corporation acquired 100% of the common shares of Talc Corporation.
There were no fair value differences or goodwill resulting from this transaction. The following information
s extracts from the December 31, 2026 for Powder and Talc:
Net income
Dividends
Property, plant, and equipment (net)
Inventory
Additional information:
.
$667,000
O $618,400
O $661,600
$613,000
■
■
■
■
200
On December 31, 2024, Powder sold a piece of equipment to Talc, recording a profit of $250,000. At that time, the
estimated useful life of the equipment of 10 years.
(370)
COPSTO
In 2025, Talc sold $250,000 in inventory to Powder. At the end of 2025, Powder still held 22% of the inventory. In
2026, Talc sold $300,000 in inventory to Powder. Powder still held 30% of the inventory at the end of 2026. Talc earns
30% gross profit on all of its inventory sales.
989898981
SE
· Powder uses the cost method to account for its investment in Talc. Both companies pay tax at a rate of 20%.
What is the inventory amount that would be recorded on the December 31, 2026, consolidated statement of financial
position?
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Powder
1,950,000
250,000
595,000
375,000
Talc
$1,100,000
125,000
850,000
265,000
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ALTAMI
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