Question: Akron, Inc., owns all outstanding stock of
Akron, Inc., owns all outstanding stock of Toledo Corporation. Amortization expense of $15,000 per year for patented technology resulted from the original acquisition. For 2018, the companies had the following account balances:
Intra-entity sales of $320,000 occurred during 2017 and again in 2018. This merchandise cost $240,000 each year. Of the total transfers, $70,000 was still held on December 31, 2017, with $50,000 unsold on December 31, 2018.
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, 2018.
Transcribed Image Text:
Akron Toledo Sales $1,100,000 $600,000 Cost of goods sold Operating expenses 500,000 400,000 220,000 400,000 Investment income Not given -0- Dividends declared 80,000 30,000
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