Perth Corporation owns 90 percent of Sydney Company's stock.At the end of 20X8,Perth and Sydney reported the following partial operating results and inventory balances:
Perth regularly prices its products at cost plus a 30 percent markup for profit.Sydney prices its sales at cost plus a 10 percent markup.The total sales reported by Perth and Sydney 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 31,20X8?

Question

Perth Corporation owns 90 percent of Sydney Company's stock.At the end of 20X8,Perth and Sydney reported the following partial operating results and inventory balances:
  Perth regularly prices its products at cost plus a 30 percent markup for profit.Sydney prices its sales at cost plus a 10 percent markup.The total sales reported by Perth and Sydney 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 31,20X8?

Quizplus · Accepted Answer

Inventory in the consolidated balance sheet for December 31, 20X8, will be reported at $56,573. This is because the consolidated balance sheet combines the assets and liabilities of both companies, and the inventory of both companies is included in the consolidated balance sheet.

Perth Corporation Owns 90 Percent of Sydney Company's Stock