Pilfer Company acquired 90 percent ownership of Scrooge Corporation in 2007,at underlying book value.On that date,the fair value of noncontrolling interest was equal to 10 percent of the book value of Scrooge Corporation.Pilfer purchased inventory from Scrooge for $90,000 on August 20,2008,and resold 70 percent of the inventory to unaffiliated companies on December 1,2008,for $100,000.Scrooge produced the inventory sold to Pilfer for $67,000.The companies had no other transactions during 2008.
-Based on the information given above,what amount of sales will be reported in the 2008 consolidated income statement?

Question

Quizplus · Accepted Answer

In order to determine the consolidated sales for 2008, we need to eliminate the intercompany sale between Pilfer and Scrooge. Pilfer purchased inventory from Scrooge for $90,000 and resold 70% of the inventory for $100,000. This means that Pilfer sold $63,000 worth of inventory that was purchased from Scrooge ($90,000 x 70%). Therefore, the consolidated sales for 2008 would be $100,000 ($63,000 + $37,000 in sales to unaffiliated companies).

Pilfer Company Acquired 90 Percent Ownership of Scrooge Corporation in 2007,at