The Trial Balances of Ash Inc Other Information:
Ash Acquired Cinder in Three Stages

question 56

Essay

The trial balances of Ash Inc. and its subsidiary Cinder Corp. on December 31, 2020 are shown below:
$\begin{array}{|l|r|r|}\hline & \text { Ash } & \text { Cinder } \\\hline \text { Inventory } & \$ 160,000 & \$ 100,000 \\\hline \text { Plant and Equipment (net) } & \$ 2,700,000 & \$ 700,000 \\\hline \text { Dividends Declared } & \$ 200,000 & \$ 100,000 \\\hline \text { Investment in Cinder } & \$ 700,000 & \\\hline \text { Cost of Goods Sold } & \$ 650,000 & \$ 90,000 \\\hline \text { Other Expenses } & \$ 50,000 & \$ 10,000 \\\hline \text { Total Assets } & \$ 4,460,000 & \$ 1,000,000 \\\hline \text { Liabilities } & \$ 1,000,000 & \$ 150,000 \\\hline \text { Common Shares } & \$ 1,660,000 & \$ 600,000 \\\hline \text { Retained Earnings } & \$ 600,000 & \$ 100,000 \\\hline \text { Sales and Other Revenue } & \$ 1,200,000 & \$ 150,000 \\\hline \text { Total Liabilities and Equity } & \$ 4,460,000 & \$ 1,000,000\\\hline\end{array}$ Other Information:
Ash acquired Cinder in three stages:
$\begin{array} { |l|l| }\hline \text { january 1, 2017:}& \begin{array} { l } \text { Ash purchased 10,000 shares for \( \$ 100,000 \). Cinder's } \\ \text { Retained Earnings were \( \$ 40,000 \) on that date. The } \\ \text {investment is classified as fair value through profit or loss } \\ \text {(FVTPL). } \\\end{array}\\\hline \text {january 1, 2019: } &\begin{array} { l } \text { Ash purchased 30,000 shares for \( \$ 450,000 \). Cinder's } \\ \text {Retained Earnings were \( \$ 80,000 \) on that date. Ash } \\ \text {has obtained significant influence in the key decisions for } \\ \text {Cinder. } \\\end{array}\\\hline \text {December 31,2020: } &\begin{array} { l } \text {Ash purchased 20,000 shares for \( \$ 150,000 \). Cinder's } \\ \text { Retained Earnings were \( \$ 100,000 \) on that date. Ash } \\ \text { now owns \( 60 \% \) and has control over Cinder.} \\\end{array}\\\hline \end{array}$
Cinder was incorporated on January 1, 2015. On that date, Cinder issued 100,000 voting shares.
Any difference between the cost and book value is attributable entirely to trademarks, which are to be amortized over 5 years. The company has neither issued nor retired shares since the date of its incorporation.
Ash sold depreciable assets to Cinder at a loss of $20,000 on January 1, 2019. These assets had a 10 year remaining life.
Intercompany sales of inventory during 2020 amounted to $250,000. Unrealized inventory profits for each company are shown below for 2020. The amounts indicate the amount of profit in each company's inventory.
$\begin{array}{|c|c|}\hline \text { Ash } & \\\hline \text { January } 1,2020: & \$ 10,000 \\\hline \text { December } 31,2020: & \$ 20,000 \\\hline \text { Cinder } & \\\hline \text { January } 1,2020: & \$ 20,000 \\\hline \text { December } 31,2020: & \$ 40,000 \\\hline\end{array}$ All inventories on hand at the start of 2020 were sold to outsiders during the year. The net incomes of both companies are evenly earned throughout the year. Both companies are subject to an effective corporate tax rate of 20%.
Compute the Consolidated Cost of Goods Sold for 2020.

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Definitions:

Attention

The act of focusing selectively on a piece of information, disregarding other perceivable information.

Outside Order Takers

Outside order takers are sales personnel who primarily accept orders from customers outside the company premises, often visiting customers in their locations to take orders without engaging in proactive selling.

Technical Programs

Educational courses or training programs focused on developing specialized skills or knowledge in specific technical fields.

Point-Of-Purchase Displays

Marketing materials or advertising placed near the product it is promoting, often located at the checkout area or other key points within a store to catch the consumer's eye.