Pfeifer Corporation Acquired an 80% Interest in Stern Corporation Several

question 23

Essay

Pfeifer Corporation acquired an 80% interest in Stern Corporation several years ago when the book values and fair values of Stern's assets and liabilities were equal.At the time of acquisition,the cost of the 80% interest was equal to 80% of the book value of Stern's net assets.Separate company income statements for Pfeifer and Stern for the year ended December 31,2011 are summarized as follows:
During 2010,Pfeifer sold merchandise that cost $120,000 to Stern for $180,000.Half of this merchandise remained in Stern's inventory at December 31,2010.During 2011,Pfeifer sold merchandise that cost $150,000 to Stern for $225,000.One-third of this merchandise remained in Stern's December 31,2011 inventory.
Required:
Prepare a consolidated income statement for Pfeifer Corporation and Subsidiary for 2011.

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Definitions:

Psychological Desire

An emotional state that compels individuals towards a specific need or want, influencing behavior.

Unfulfilled

A state or condition where expectations, needs, or goals have not been met or achieved.

Lower-order Needs

Basic human necessities such as physiological and safety needs, according to Maslow’s hierarchy.

Psychological Development

The growth and change in an individual's mental functions and behaviors throughout their lifespan.