Flintstone Inc acquired all of Rubble Co on January 1 2018 F

Flintstone Inc. acquired all of Rubble Co. on January 1, 2018. Flintstone decided to use the initial value method to account for this investment. During 2018, Flintstone sold to Rubble for $600,000 inventory with a cost of $500,000. At the end of the year 30% of the goods were still in Rubble\'s inventory. Required: Prepare Consolidation Entry TIfor the intra-entity transfer and Consolidation Entry G for the ending inventory adjustment necessary for the consolidation worksheet at 12/31/20.

Solution

Adjustment necessary for the consolidation worksheet at 12/31/20 are as below.

1) Consolidation Entry TI

Sale Dr...................... $600,000

Cost of Goods Sold Cr................ $600,000

2) Consolidation Entry G

Cost of Goods Sold Dr.....................$30,000

Inventory Cr.....................................$30,000