In: Accounting
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?
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 |