Cattle Company sold inventory with a cost of $40,000 to its 90%-owned subsidiary, Range Corp., for $100,000 in 2016.Range resold $75,000 of this inventory for $100,000 in 2016.Based on this information, the amount of inventory reported on the consolidated financial statements at the end of 2016 is:
A)$10,000.
B)$18,000.
C)$21,000.
D)$30,000.

Question

Cattle Company sold inventory with a cost of $40,000 to its 90%-owned subsidiary, Range Corp., for $100,000 in 2016.Range resold $75,000 of this inventory for $100,000 in 2016.Based on this information, the amount of inventory reported on the consolidated financial statements at the end of 2016 is:
A)​$10,000.
B)​$18,000.
C)​$21,000.
D)​$30,000.

Quizplus · Accepted Answer

The remaining inventory cost is $25,000 ($100,000 - $75,000). The original cost to Cattle Company was $10,000 ($40,000/4), so the inventory is reported at $10,000 on the consolidated financial statements.

Cattle Company Sold Inventory with a Cost of $40,000 to Its