Assume That Icecap Sold Inventory to Polar at a Markup

question 38

Essay

Assume that Icecap sold inventory to Polar at a markup equal to 25% of cost.Intra-entity transfers were $70,000 in 2017 and $112,000 in 2018.Of this inventory, $29,000 of the 2017 transfers were retained and then sold by Polar in 2018, whereas $49,000 of the 2018 transfers was held until 2019.
Required:
For the consolidated financial statements for 2018, determine the balances that would appear for the following accounts: (i) Cost of Goods Sold; (ii) Inventory; and (iii) Net income attributable to the noncontrolling interest.

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Definitions:

Rehabilitation

The process of restoring something to its original state or to a condition that is functional and satisfactory, often used in the context of buildings, wildlife, or individuals recovering from injury.

Maintenance Department

A division within an organization tasked with keeping systems, buildings, and equipment in operating condition.

Machine-hours

measures the total time that machines are operating, often used as a basis for allocating manufacturing overhead to products.

Fixed Cost

Fixed costs are unaffected by the volume of production or sales, covering expenditures like rental fees, salaries, and insurance charges.