Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pouch Corporation acquired an 80% interest in Shenley Corporation on January 1, 2014, when the book values of Shenley's assets and liabilities were equal to

Pouch Corporation acquired an 80% interest in Shenley Corporation on January 1, 2014, when the book values of Shenley's assets and liabilities were equal to their fair values. The cost of the 80% interest was equal to 80% of the book value of Shenley's net assets. During 2014, Pouch sold merchandise that cost $70,000 to Shenley for $86,000. On December 31, 2014, three-fourths of the merchandise acquired from Pouch remained in Shenley's inventory. Separate incomes (investment income not included) of the two companies are as follows: image text in transcribed

The consolidated income statement for Pouch Corporation and subsidiary for the year ended December 31, 2014 will show consolidated cost of sales of

$148,000.

$120,000.

$210,000.

$136,000.

Sales Revenue Cost of Goods Sold Operating Expenses Separate incomes Pouch Sherley $160,000 $180,000 90,000 120,000 17.000 21.000 $43 49,000 43,000

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

Montgomerys Auditing Classic Reprint Series

Authors: Robert Hiester Montgomery

1st Edition

1390439356, 978-1390439359

More Books

Students also viewed these Accounting questions