Pittle Corporation Acquired a 80% Interest in Seel Corporation at a Cost

question 13

Essay

Pittle Corporation acquired a 80% interest in Seel Corporation at a cost equal to 80% of the book value of Seel's net assets several years ago.At the time of purchase, the fair value and book value of Seel's assets and liabilities were equal.Pittle purchases its entire inventory from Seel at 150% of Seel's cost.During 2011, Seel sold $490,000 of merchandise to Pittle.Pittle's beginning and ending inventories for 2011 were $72,000 and $66,000, respectively.Income statement information for both companies for 2011 is as follows:
Required:
Prepare a consolidated income statement for Pittle Corporation and Subsidiary for 2011.

---

Definitions:

Ordinary Income

Income earned through wages, salaries, commissions, and interest, as opposed to capital gains, which are realized through the sale of assets.

Income Component

The part of an investment's return that comes from dividends or interest payments, as opposed to capital gains.

Broker-dealers

Firms that trade securities for customers and their own accounts, providing investment services.

Clients' Interests

A principle in financial and legal services that emphasizes prioritizing the needs and goals of clients above those of the professional or the firm.