Consolidation Entries: Inventory Transfer at Cost In 2006, Parma Inc. sold inventory costing $40,000 to its 100%-owned
Question:
Consolidation Entries: Inventory Transfer at Cost In 2006, Parma Inc. sold inventory costing
$40,000 to its 100%-owned subsidiary, Sarma Inc., for $40,000.
Prepare the consolidation entry at the end of 2006, 2007, and 2008 relating to this intercompany inventory transfer under each of the following assumptions:
1. Sarma resold all of the inventory in 2008 for $60,000.
2. Sarma resold all of the inventory in 2006 for $60,000.
3. In 2006 Sarma sold 75% of the inventory for $45,000 and the remaining 25% in 2008 for
$15,000.
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