Elbonia Corporation,a 100 percent subsidiary of Atomic Corporation,caters to its parent's entire inventory requirements.In 2007,Elbonia produced inventory at a cost of $36,000 and sold it to Atomic for $75,000.Atomic held all the items in inventory on January 1,2008.During 2008,Atomic sold all the units for $98,000.Assume that the companies had no other transactions during 2007 and 2008.
-Based on the preceding information,what amount would be reported in the consolidated financial statements for inventory on January 1,2008?

Question

Quizplus · Accepted Answer

In consolidated financial statements, intercompany transactions are eliminated. Therefore, the inventory is reported at Elbonia's cost of $36,000, not the price at which it was sold to Atomic.

Elbonia Corporation,a 100 Percent Subsidiary of Atomic Corporation,caters to Its