Proman Manufacturing owns a 90% interest in Sipp Company, purchased at a time when the book values of Sipp's recorded assets and liabilities were equal to fair values. During 2014, Sipp sold merchandise to Proman for $80,000 at a 20% gross profit. At December 31, 2014, 25% of this merchandise is still in Proman's inventory. Separate incomes for Proman and Sipp are summarized as follows:
Required: Prepare a consolidated income statement for 2014 for Proman and subsidiary.

Question

Proman Manufacturing owns a 90% interest in Sipp Company, purchased at a time when the book values of Sipp's recorded assets and liabilities were equal to fair values. During 2014, Sipp sold merchandise to Proman for $80,000 at a 20% gross profit. At December 31, 2014, 25% of this merchandise is still in Proman's inventory. Separate incomes for Proman and Sipp are summarized as follows:
  Required: Prepare a consolidated income statement for 2014 for Proman and subsidiary.

Quizplus · Accepted Answer

The Answer of Proman Manufacturing owns a 90% interest in Sipp Company, purchased at a time when the book values of Sipp's recorded assets and liabilities were equal to fair values. During 2014, Sipp sold merchandise to Proman for $80,000 at a 20% gross profit. At December 31, 2014, 25% of this merchandise is still in Proman's inventory. Separate incomes for Proman and Sipp are summarized as follows:
  Required: Prepare a consolidated income statement for 2014 for Proman and subsidiary.

Proman Manufacturing Owns a 90% Interest in Sipp Company, Purchased