Portia Ltd.acquired 80% of Siro Ltd.on December 31,20X0.At the acquisition date,Siro's net assets totalled $15,000.Portia uses the cost method to record the acquisition.At December 31,20X1,the separate-entity financial statements showed the following:

During 20X1,Siro sold $7,000 of goods,with a gross margin of 40%,to Portia.At the end of 20X1,$3,000 of the goods were still in Portia's inventory.What is Portia's consolidated cost of goods sold for 20X1?

Question

Portia Ltd.acquired 80% of Siro Ltd.on December 31,20X0.At the acquisition date,Siro's net assets totalled $15,000.Portia uses the cost method to record the acquisition.At December 31,20X1,the separate-entity financial statements showed the following:

During 20X1,Siro sold $7,000 of goods,with a gross margin of 40%,to Portia.At the end of 20X1,$3,000 of the goods were still in Portia's inventory.What is Portia's consolidated cost of goods sold for 20X1?

Quizplus · Accepted Answer

The Answer of Portia Ltd.acquired 80% of Siro Ltd.on December 31,20X0.At the acquisition date,Siro's net assets totalled $15,000.Portia uses the cost method to record the acquisition.At December 31,20X1,the separate-entity financial statements showed the following:

During 20X1,Siro sold $7,000 of goods,with a gross margin of 40%,to Portia.At the end of 20X1,$3,000 of the goods were still in Portia's inventory.What is Portia's consolidated cost of goods sold for 20X1?