McGraw Corp.owned all of the voting common stock of both Ritter Co.and Lawler Co.During 2009,Ritter sold inventory to Lawler.The goods had cost Ritter $65,000,and they were sold to Lawler for $100,000.At the end of 2009,Lawler still held 30% of the inventory.
Required:
How should the sale between Lawler and Ritter be accounted for by the consolidated entity?

Question

Quizplus · Accepted Answer

The Answer of McGraw Corp.owned all of the voting common stock of both Ritter Co.and Lawler Co.During 2009,Ritter sold inventory to Lawler.The goods had cost Ritter $65,000,and they were sold to Lawler for $100,000.At the end of 2009,Lawler still held 30% of the inventory.
Required:
How should the sale between Lawler and Ritter be accounted for by the consolidated entity?