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Deb Co. acquired 100% of Land Inc. on January 5, 2016. During 2016, Deb sold goods...

Deb Co. acquired 100% of Land Inc. on January 5, 2016. During 2016, Deb sold goods to Land for $2.4 million that cost Deb $1.8 million. Land still owned 40% of the goods at the end of the year. Cost of goods sold was $10.8 million for Deb and $6.4 million for Land. What was consolidated cost of goods sold?

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Expert Solution

Summary of Inter company transaction
DEB LAND
Cost of goods sold        10.80          6.40
Inter-company Sale          1.80
IC Stock ultimately sold to third party-2.40*60%          1.44
COGS to outside          9.00          4.96
Inter-company stock profit (2.40-1.80)*60%          0.36
COGS for IC stock sold to third party-1.44-0.36          1.08
Consoldated COGS- To oursider+IC stock          9.00          6.04
Consoldated COGS total        15.04

ekkarill92 answered 1 year ago
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