Gentry Inc. acquired 100% of Gaspard Farms on January 5, 2012. During 2012, Gentry sold Gaspard Farms for $625,000 goods which had cost $425,000. Gaspard Farms still owned 12% of the goods at the end of the year. In 2013, Gentry sold goods with a cost of $800,000 to Gaspard Farms for $1,000,000, and Gaspard Farms still owned 10% of the goods at year-end. For 2013, cost of goods sold was $5,400,000 for Gentry and $1,200,000 for Gaspard Farms. What was consolidated cost of goods sold for 2013?

Question

Quizplus · Accepted Answer

Intra-entity gross profit ($1,000,000 - $800,000) $200,000 × Inventory remaining at year's end 10% = $20,000Consolidated COGS = Parents COGS $5,400,000 + Sub's COGS $1,200,000 - Total Intra-Entity Transfer $1,000,000 - Recognize Deferred Gross Profit from 2012 $24,000 + Deferred Unrealized Profit from 2013 $20,000 = $5,596,000