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Chevron Corporation acquired 94% of its subsidiary on January 1, 2023. The following intercompany transactions occurred during the year: Chevron sold goods to the subsidiary
Chevron Corporation acquired 94% of its subsidiary on January 1, 2023. The following intercompany transactions occurred during the year:
- Chevron sold goods to the subsidiary for $900,000, with a cost of $630,000. Half of these goods remained in the subsidiary's inventory at year-end.
- Chevron provided refining services to the subsidiary worth $450,000.
- The subsidiary declared and paid dividends of $110,000.
Required:
- Prepare the necessary consolidation adjustments for the intercompany transactions.
- Prepare the consolidated financial statements for the year ending December 31, 2023.
- Discuss the challenges of preparing consolidated financial statements and the importance of eliminating intercompany transactions.
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