Question

Parkette, Inc., acquired a 60 percent interest in Skybox Company several years ago. During 2020, Skybox...

Parkette, Inc., acquired a 60 percent interest in Skybox Company several years ago. During 2020, Skybox sold inventory costing $142,000 to Parkette for $177,500. A total of 15 percent of this inventory was not sold to outsiders until 2021. During 2021, Skybox sold inventory costing $106,250 to Parkette for $125,000. A total of 28 percent of this inventory was not sold to outsiders until 2022. In 2021, Parkette reported cost of goods sold of $515,000 while Skybox reported $255,000. What is the consolidated cost of goods sold in 2021?

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Answer #1

Parkette inc -

Parkette inc acquired 60% in

Consolidation cost of good sold
Particular Amount
Parent balance $515,000
Add- Subsidary balance $255,000
Minus -intercompany transfer (125,000)
Minus - Recognize 2020 deferred gross profit (5325)
Add- Defer 2021 unrealized gross profit 5250
cost of goods sold $644,925

Notes-

Untealized gross profit 2020

- Intra company gross profit =

$177,500 - $142,000 = $35,500

Inventory remaining at year end =15%

=35,500 * 15%

=$5325

Unrealized intercompany gross profit 2020=$5325

Unrealized gross profit 2021

Intercompany gross profit = $125,000 $106,250

=$18,750

Inventory remaining at year end = 28%

Unrealized intercompany gross profit

=$18,750 *28%

=$5250

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