Question
Advanced Accounting (down-stream intercompany sales, profits in ending inventory - Equity method.) Parent subsidiary Revenues 3,360,000 2,280,000 costs of goods sold (2,184,000) (1,368,000) Gross profit
Advanced Accounting (down-stream intercompany sales, profits in ending inventory - Equity method.)
Parent | subsidiary | |
Revenues | 3,360,000 | 2,280,000 |
costs of goods sold | (2,184,000) | (1,368,000) |
Gross profit | 1,176,000 | 912,000 |
Expenses | (780,000) | (606,000) |
Net Income | 396,000 | 306,000 |
On Jan 1st, 2016 neither company held inv purchased from each other. All sales made by either company have the same gross margin regardless of whether they are made to affiliates or non-affiliates. Subsidiary declared $240,000 dividend in 2016
Assume that during the year 2016 parent sold merchandise to the subsidiary for $ 300,000. The subsidiary still held 25% of the goods purchased. What is the amount of "income from subsidiary" recognized by the parent company if it applies the equity method of pre-consolidation investment bookkeeping?
A $396,000
B $332,250
C $306,000
D $279,7550
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