Question
Pfeifer Corporation acquired an 80% interest in Stern Corporation several years ago when the book values and fair values of Stern's assets and liabilities were
Pfeifer Corporation acquired an 80% interest in Stern Corporation several years ago when the book values and fair values of Stern's assets and liabilities were equal.
At the time of acquisition, the cost of the 80% interest was equal to 80% of the book value of Stern’s net assets. Separate company income statements for Pfeifer and Stern for the year ended December 31, 2014 are summarized as follows:
Pfeifer Stern
Sales Revenue $1,000,000 $600,000
Investment income from Stern 85,000
Cost of Goods Sold (600,000) (300,000)
Expenses (200,000) (200,000)
Net Income $285,000 $100,000
During 2013, Pfeifer sold merchandise that cost $120,000 to Stern for $180,000. Half of this merchandise remained in Stern’s inventory at December 31, 2013. During 2014, Pfeifer sold merchandise that cost $150,000 to Stern for $225,000. One-third of this merchandise remained in Stern’s December 31, 2014 inventory.
Required:
Prepare a consolidated income statement for Pfeifer Corporation and Subsidiary for 2014.
What will be an ideal response?
Step by Step Solution
3.41 Rating (154 Votes )
There are 3 Steps involved in it
Step: 1
Pfeifer Corporation and Subsidiary Consolidated Income Statement For the Year Ended December ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started