Reference no: EM132790813

Question - On January 1, 2019, Entity A acquired 60% of outstanding ordinary shares of Entity B at a gain on bargain purchase of P 80,000. For the year ended December 31, 2020, Entity A and Entity B reported sales revenue of P 4,000,000 and P 2,000,000 in their respective separate income statements. In the same year, Entity A and Entity B reported the cost of goods sold of P 2,400,000 and P 1,400,000 in their respective separate income statements.

During 2019, Entity A sold inventory to Entity B at a selling price of P 560,000 with a gross profit rate of P 40% based on cost. On the other hand, Entity B sold inventory to Entity A at a selling price of P 800,000 with a gross profit rate of 30% based on sales during 2020.

On December 31, 2019, 25% of the goods coming from Entity A remained in Entity B's inventory but all were eventually sold to third parties during 2020. As of December 31, 2020, 40% of the goods coming from Entity B were eventually sold to third parties.

For the year ended December 31, 2020, Entity A reported a net income of P 1,120,000 while Entity B reported a net income of P 400,000 and distributed dividends of P 100,000. Entity A accounted for its investment in Entity B using the cost method in its separate financial statements.

Required -

What is the consolidated sales revenue for the year ended December 31, 2020?

What is the consolidated cost of goods sold for the year ended December 31, 2020?