Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

answer #1 please Several years ago, Sammy Inc. acquired a 70% interest in Lavender Co. The book values of Lavender's asset and liability accounts at

image text in transcribedanswer #1 please

Several years ago, Sammy Inc. acquired a 70% interest in Lavender Co. The book values of Lavender's asset and liability accounts at that time were considered to be equal to their fair valoer Sammy's ncquisition value corresponded to the underlying book value of Lavender so that no allocations or goodwill resulted from the transfer. The following selected account balances were from the individual financial records of these two companies as of December 31, 2022: Sammy Lavender Sales $424,000 $249,000 Cost of goods 158,000 103,000 sold Operating 80.000 36,000 expenses Inventory 125.000 96,000 Building (net) $20,000 180.000 Investment not given income Assume that Lavender sold inventory to Sammy at a 20% zross profit rate. Intra-entity transfers were $60,000 in 2021 and 580,000 in 2022. Of this inventory, S15,000 of the 2021 transfers were retained and then sold by Sammy in 2022, whereas S25,000 of the 2022 transfers were held until 2023. Sammy sold a building to Lavender on January 1, 2021 for $76,000, although the book value of this assct was only $40,000 on that date. The building had a six-year remaining useful Le and was to be depreciated using the straight-ling method with no salvage value Answer the following questions (Do not add dollar sign, do not add comma to your amount round the answer to the whole number) Determine the amount of intra-entity profit remains in Sammy's inventory at the end of 2021. 2. Determine the amount of intra entity profit remains in Saramy's inventory at the end of 2022 3. Determine the consolidated balance of cost of goods sold for 2022 A Determins the consolidated balance of inventory for 2022

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial & Managerial Accounting

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

13th edition

9781133607618, 978-1285868776

More Books

Students also viewed these Accounting questions