Reference no: EM13589003

Edgar Co. acquired 60% of Stendall Co. on January 1, 2011. During 2011, Edgar made several sales of inventory to Stendall. The cost and selling price of the goods were $140,000 and $200,000, respectively. Stendall still owned one-fourth of the goods at the end of 2011. Consolidated cost of goods sold for 2011 was $2,140,000 because of a consolidating adjustment for intra-entity sales less the entire profit remaining in Stendall's ending inventory.
How would consolidated cost of goods sold have differed if the inventory transfers had been for the same amount and cost, but from Stendall to Edgar?

Select one:

a. Consolidated cost of goods sold would have remained $2,140,000.

b. Consolidated cost of goods sold would have been more than $2,140,000 because of the controlling interest in the subsidiary.

c. Consolidated cost of goods sold would have been less than $2,140,000 because of the non-controlling interest in the subsidiary.

d. Consolidated cost of goods sold would have been more than $2,140,000 because of the non-controlling interest in the subsidiary.

e. The effect on consolidated cost of goods sold cannot be predicted from the information provided.