Use the Following Information to Answer the Question(s) Below

question 22

Multiple Choice

Use the following information to answer the question(s) below.

Paggle Corporation owns 80% of Spillway Inc.'s common stock that was purchased at its underlying book value. At the time of purchase, the book value and fair value of Spillway's net assets were equal. The two companies report the following information for 2014 and 2015.

During 2014, one company sold inventory to the other company for $50,000 which cost the transferor $40,000. As of the end of 2014, 30% of the inventory was unsold. In 2015, the remaining inventory was resold outside the consolidated entity.

-If the intercompany sale was an upstream sale,the total amount of consolidated cost of goods sold for 2015 will be

• A)$300,000.
• B)$430,000.
• C)$470,000.
• D)$477,000.

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Definitions:

Business Location

The physical place where a company is situated, which can impact its success and operational efficiency.

Supplies

Items or materials used in the operation of a business, often consumable in nature.

Test Equipment

Specialized tools and devices used for testing, measuring, and validating the performance of products or machinery.

Overhauling

The comprehensive process of inspecting, cleaning, repairing, and replacing necessary parts of machinery, vehicles, or equipment.