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3. ABC Corporation acquired an 80% interest in XYZ Corporation on January 1, 2020, when the book values of XYZ's assets and liabilities were equal

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3. ABC Corporation acquired an 80% interest in XYZ Corporation on January 1, 2020, when the book values of XYZ's assets and liabilities were equal to their fair values. The cost of the 80% interest was equal to 80% of the book value of XYZ's net assets. During 2020, ABC old merchandise that cost $70,000 to XYZ for $86,000. On December 31, 2020, three-fourths of the merchandise acquired from ABC remained in XYZ s inventory. Separate incomes (investment income not included) of the two companies are as follows: Sales Revenue Cost of Goods Sold Operating Expenses Separate incomes ABC XYZ $180,000 $160,000 120,000 90,000 17,000 21,000 $ 43,000 $49,000 The consolidated income statement for ABC Corporation and subsidiary for the year ended December 31, 2020 will show consolidated cost of sales of (2 Points) $136.000

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