Reference no: EM133065067
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:
|
|
Windsor
|
LaSalle
|
|
Sales
|
$1,100,000
|
$600,000
|
|
Cost of goods sold
|
500,000
|
400,000
|
|
Operating expenses
|
400,000
|
220,000
|
|
Investment income
|
Not given
|
0
|
|
Dividends declared
|
80,000
|
30,000
|
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 -
1. For consolidation purposes, does the direction of the transfers (upstream or downstream) affect the balances to be reported here?
2. Prepare a consolidated income statement for the year ending December 31, 2021.