Perth Corporation owns 90 percent of Dundee Company's stock.At the end of 2008,Perth and Dundee reported the following partial operating results and inventory balances:
Perth regularly prices its products at cost plus a 30 percent markup for profit.Dundee prices its sales at cost plus a 10 percent markup.The total sales reported by Perth and Dundee include both intercompany sales and sales to nonaffiliates.

-Based on the information given above,what balance will be reported for inventory in the consolidated balance sheet for December 31,2008?

Question

Perth Corporation owns 90 percent of Dundee Company's stock.At the end of 2008,Perth and Dundee reported the following partial operating results and inventory balances:
Perth regularly prices its products at cost plus a 30 percent markup for profit.Dundee prices its sales at cost plus a 10 percent markup.The total sales reported by Perth and Dundee include both intercompany sales and sales to nonaffiliates.
 
-Based on the information given above,what balance will be reported for inventory in the consolidated balance sheet for December 31,2008?

Quizplus · Accepted Answer

Inventory in the consolidated balance sheet is the sum of the inventory balances of the parent company and the subsidiary. The parent company's inventory balance is $56,573, and the subsidiary's inventory balance is $10,427. Therefore, the total inventory balance in the consolidated balance sheet is $56,573 + $10,427 = $67,000.

Perth Corporation Owns 90 Percent of Dundee Company's Stock