Reference no: EM133071549
Question - Windsor, Inc., owns all outstanding stock of LaSalle Corporation. Amortization expense of $15,000 per year for patented technology resulted from the original acquisition. For 2021, the companies had the following account balances:
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Windsor
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LaSalle
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Sales
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$1,100,000
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$600,000
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Cost of goods sold
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500,000
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400,000
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Operating expenses
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400,000
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220,000
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Investment income
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Not given
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0
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Dividends declared
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80,000
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30,000
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Intra-entity sales of $320,000 occurred during 2020 and again in 2021. This merchandise cost $240,000 each year. Of the total transfers, $70,000 was still held on December 31, 2020, with $50,000 unsold on December 31, 2021.
Required -
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, 2021.
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