What amount should pate report as sales revenue

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Reference no: EM131792068

Question: Pate Corp. owns 80% of Strange Inc.'s common stock. During 2014, Pate sold inventory to Strange for $600,000 on the same terms as sales made to outside customers. Strange sold the entire inventory purchased from Pate by the end of 2014. Pate and Strange report the following for 2014.

Pate Strange

Sales $2,700,000 $1,600,000

Cost of sales 1,800,000 900,000

Gross profit $ 900,000 $ 700,000

Required: 1. What amount should Pate report as sales revenue in its 2014 consolidated income statement?

2. What amount should Pate report as cost of sales in its 2014 consolidated income statement?

Reference no: EM131792068

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