Reference no: EM132785111

On January 1, 2019, RICH Company acquired 90% of the outstanding shares of POOR Inc. at book value. During 2019 and 2020, Intercompany sales amounted to ?2,000,000 and ?4,000,000 respectively. RICH consistently recognize a 20% markup based on sales while POOR Company had a 25% gross profit on sales .

The inventories in the buyer's book, which all came from intercompany transactions show:

                  Dec. 31, 2019            Dec. 31, 2020
RICH        ? 240,000                   ? 160,000
POOR       100,000                             40,000

On October 1, 2020, POOR Inc. purchased a piece of land costing ?1,000,000 from RICH Company for ?1,500,000. On the other hand, on July 1, 2020, POOR Inc. sold an equipment with a carrying value of ?60,000 and remaining life of 3 years to RICH for ?42,000.

Separate Statements of Comprehensive Income for the two companies for the year 2020 follow:

                                                    RICH                             POOR
Sales                                       ? 25,000,000             ? 14,000,000
Less: Cost of Sales                     15,000,000                  8,400,000
Gross Profit                             10,000,000                   5,600,000
Less: Operating expenses          6,000,000                  3,800,000
Operating profit                       4,000,000                1,800,000
Loss on Sale of Equipment (18,000)
Dividends Revenue 40,000
                                              ? 4,000,000                 ? 1,822,000

problem a: Compute the following:

1. Consolidated Sales
2. Consolidated Cost of Sales
3. Consolidated Gross Profit
4. Consolidated Net Income, Controlling Interest in Net Income, and Non-Controlling Interest in Net Income