1- Utes acquires 90% of Cougar on January 1^st 20X1 for $810K (the underlying book value). At the time of the acquisition Cougars Retained Earnings was $400K and Common Stock was $500K. During the year, Ute sold $450,000 of inventory to Cougar. The inventory originally cost Ute $270,000. At the end of the year, Cougar had $90,000 of that inventory on hand. The remainder had been sold to an outside party. Including the sale of the intercompany inventory to an outside party, Cougar had net income of $250K and no dividends were paid during the year. At the date of acquisition Utes accumulated depreciation was $35K and Cougars was $25K.

a- Ute accounts for Cougar under the fully adjusted equity method. Prepare all equity method adjustments that will be necessary for the entire year ending December 31, 20X1. (5pts)

b- Prepare all Elimination Entries at December 31, 20X1 (8pts)

c) What is the consolidated ending inventory at December 31st 20X1 (2pts)