McGraw Corp

question 61

Essay

McGraw Corp. owned all of the voting common stock of both Ritter Co. and Lawler Co. During 2013, Ritter sold inventory to Lawler. The goods had cost Ritter $65,000, and they were sold to Lawler for $100,000. At the end of 2013, Lawler still held 30% of the inventory.
Required:
How should the sale between Lawler and Ritter be accounted for in a consolidation worksheet? Show worksheet entries to support your answer.

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Definitions:

Nonmanipulated Independent Variable

An independent variable for which condition assignment is determined by a characteristic of the participant.

Dependent Variable

The experimental variable measured by the experimenter and used to compare groups.

College Education

College education refers to the post-secondary learning experience offered by colleges and universities, leading to the award of a degree, diploma, or certificate.

Law of Parsimony

A principle that suggests when faced with competing hypotheses, the one that makes the fewest assumptions should be selected.