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Facebook, Inc. acquired 75% of WhatsApp Inc.'s outstanding shares on January 1, 20X1, for $19 billion. During 20X1, WhatsApp Inc. sold inventory to Facebook, Inc.
Facebook, Inc. acquired 75% of WhatsApp Inc.'s outstanding shares on January 1, 20X1, for $19 billion. During 20X1, WhatsApp Inc. sold inventory to Facebook, Inc. for $2 million at a gross profit of 25%. Facebook, Inc. had not sold all of this inventory to external parties by the end of the year. Determine the impact of the intercompany sale on consolidated net income for the year ended December 31, 20X1, assuming a full consolidation approach.
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