Question

Gentry Inc. acquired 100% of Gaspard Farms on January 5, 2010. During 2010,
Gentry sold Gaspard Farms for $625,000 goods which had cost $425,000. Gaspard
Farms still owned 12% of the goods at the end of the year. In 2011, Gentry sold goods
with a cost of $800,000 to Gaspard Farms for $1,000,000, and Gaspard Farms still owned
10% of the goods at year-end. For 2011, cost of goods sold was $5,400,000 for Gentry
and $1,200,000 for Gaspard Farms. As a result of the above what consolidation entries
are required for 12-31-2011?

Answer 1

Here, we have explained the concept of consolidation adjustments are necessary for inter company transaction to be settled, so that actual position can be presented in the consolidated financial statements at year end . We have explained with proper notes and reason for the journal entry .

Please refer the working below.

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