Pfeifer Corporation Acquired an 80% Interest in Stern Corporation Several

question 6

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 31,2014 are summarized as follows:
During 2013,Pfeifer sold merchandise that cost $120,000 to Stern for $180,000.Half of this merchandise remained in Stern's inventory at December 31,2013.During 2014,Pfeifer sold merchandise that cost $150,000 to Stern for $225,000.One-third of this merchandise remained in Stern's December 31,2014 inventory.
Required:
Prepare a consolidated income statement for Pfeifer Corporation and Subsidiary for 2014.

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Definitions:

Acids

Substances that release hydrogen ions (H+) when dissolved in water, typically having a sour taste and capable of turning blue litmus paper red.

Bases

Chemical substances that can accept hydrogen ions (H+) and are characterized by a pH greater than 7 when dissolved in water.

Hydrophilic

Describing molecules or substances that have a natural affinity for water and can dissolve in or absorb water easily.

Hydrophobic

A characteristic of molecules or substances that do not readily mix with or are repelled by water, often due to nonpolar characteristics.