On January 1, 2013, Pride, Inc. acquired 80% of the outstanding voting common stock of Strong Corp. for $364,000. There is no active market for Strong's stock. Of this payment, $28,000 was allocated to equipment (with a five-year life) that had been undervalued on Strong's books by $35,000. Any remaining excess was attributable to goodwill which has not been impaired.
As of December 31, 2013, before preparing the consolidated worksheet, the financial statements appeared as follows:
During 2013, Pride bought inventory for $112,000 and sold it to Strong for $140,000. Only half of this purchase had been paid for by Strong by the end of the year. 60% of these goods were still in the company's possession on December 31, 2013.
What is the consolidated total for inventory at December 31, 2013?
A) $336,000.
B) $280,000.
C) $364,000.
D) $347,200.
E) $349,300.

Question

On January 1, 2013, Pride, Inc. acquired 80% of the outstanding voting common stock of Strong Corp. for $364,000. There is no active market for Strong's stock. Of this payment, $28,000 was allocated to equipment (with a five-year life) that had been undervalued on Strong's books by $35,000. Any remaining excess was attributable to goodwill which has not been impaired.
As of December 31, 2013, before preparing the consolidated worksheet, the financial statements appeared as follows: 
During 2013, Pride bought inventory for $112,000 and sold it to Strong for $140,000. Only half of this purchase had been paid for by Strong by the end of the year. 60% of these goods were still in the company's possession on December 31, 2013.
What is the consolidated total for inventory at December 31, 2013?
A) $336,000. 
B) $280,000. 
C) $364,000. 
D) $347,200. 
E) $349,300.

Quizplus · Accepted Answer

BV Parent's Inventory $210,000 + BV Sub's Inventory $154,000 - Unrealized Profit on Inventory Transfer ($28,000 × .60) $16,800 = $347,200