Question One (15 marks): FACE , Inc., owns all outstanding stock of KANADA Corporation. Amortization...
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Accounting
Question One (15 marks):
FACE , Inc., owns all outstanding stock of KANADA Corporation. Amortization expense of $15,000 per year for patented technology resulted from the original acquisition. For 2021, the companies had the following account balances:
Windsor
LaSalle
Sales
$
1,100,000
$
600,000
Cost of goods sold
500,000
400,000
Operating expenses
400,000
220,000
Investment income
Not given
0
Dividends declared
80,000
30,000
Intra-entity sales of $320,000 occurred during 2020 and again in 2021. This merchandise cost $240,000 each year. Of the total transfers, $70,000 was still held on December 31, 2020, with $50,000 unsold on December 31, 2021.
For consolidation purposes, does the direction of the transfers (upstream or downstream) affect the balances to be reported here?
Prepare a consolidated income statement for the year ending December 31, 2021.
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