FAR – Intercompany Transaction Question

  • Creator
    Topic
  • October 31, 2011 at 4:25 pm #162466
    Sherriaf
    Participant

    Can someone help me understand the answer for this question:

    “During Year 2, Company X (parent) purchased merchandise from Company Y (Sub) at an aggregate invoice price of $180,000, which included a 100% markup of Company Y’s (Sub) cost. At December 31, Year 2, Company X (Parent) had $36,000 of this merchandise remaining in its inventory.” Eliminate intercompany Sales.

    Answer:

    Sales $180,000

    COGS 162,000

    Inventory 18,000

    Please explain to me how to eliminate COGS and inventory in a simplified way. Thank you

    AUD 79 (EXPIRED) 86
    BEC 69, 74, 75 (EXPIRED) 77
    REG 84
    FAR 74, 77

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