Edgar Co Acquired 60% of Stendall Co

question 41

Multiple Choice

Edgar Co. acquired 60% of Stendall Co. on January 1, 2013. During 2013, Edgar made several sales of inventory to Stendall. The cost and selling price of the goods were $140,000 and $200,000, respectively. Stendall still owned one-fourth of the goods at the end of 2013. Consolidated cost of goods sold for 2013 was $2,140,000 because of a consolidating adjustment for intra-entity sales less the entire profit remaining in Stendall's ending inventory.
How would consolidated cost of goods sold have differed if the inventory transfers had been for the same amount and cost, but from Stendall to Edgar?

• A) Consolidated cost of goods sold would have remained $2,140,000.
• B) Consolidated cost of goods sold would have been more than $2,140,000 because of the controlling interest in the subsidiary.
• C) Consolidated cost of goods sold would have been less than $2,140,000 because of the non-controlling interest in the subsidiary.
• D) Consolidated cost of goods sold would have been more than $2,140,000 because of the non-controlling interest in the subsidiary.
• E) The effect on consolidated cost of goods sold cannot be predicted from the information provided.

---

Definitions:

Enuresis

A disorder marked by repeated bed-wetting or wetting of one’s clothes.

Bedwetting

The involuntary passing of urine during sleep, medically known as nocturnal enuresis.

Age of Five

Refers to the period in a child's life when they are five years old, a stage important for development in areas like language, motor skills, and social interaction.

Relational Aggression

A type of aggression in which harm is caused through manipulation or damage to relationships or social standing.