Consolidated Income Statement
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Allen, Inc., owns all of the outstanding stock of Bowen Corporation. Amortization expense of $9,000 per year resulted from the original purchase. For 2004, the companies had the following account balances:
Allen Bowen
Sales 900,000 500,000
Cost of Goods Sold 400,000 300,000
Operations Expense 300,000 120,000
Investment Income not given 0
Dividends Paid 60,000 40,000
Intercompany sales of $200,000 occurred during 2003 and again in 2004. This merchandise cost $140,000 each year. Of the total transfers, $60,000 was still held on December 31, 2003, with
$45,000 unsold on December 31, 2004.
a. For consolidation purposes, does the direction of the transfers (upstream or downstream) affect the balances to be reported here?
b. Prepare a consolidated income statement for the year ending December 31, 2004.
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Solution Summary
A consolidated income statement is prepared.
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a. For consolidation purposes, does the direction of the transfers (upstream or downstream) affect the balances to be reported here?
Yes, it would because those 2 directions differ for the ...
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