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:

American System

The American System was an economic plan that played a significant role in American policy during the first half of the 19th century. It advocated for a strong federal government to create a protective tariff, a national bank, and infrastructure improvements.

Northeast

A region in the United States known for its historical significance, economic output, and dense population, typically including states in the upper Northeastern part of the country.

Slavery

A system in which people are legally owned by others as property and are forced to work without freedom or the right to compensation.

Nullification

The doctrine suggesting that states have the right to invalidate any federal law which they view as unconstitutional.