Question;Chapter 5 Assignment 1;Pexo Industries;purchases the majority of their raw materials from an 80% owned subsidiary;Springmade Chemicals. Pexo purchased Springmade to assure supply availability;at a time when the materials were being rationed in the industry due to supply;issues overseas. Pexo was able to purchase Springmade at the book value of;Springmade's net assets. At the time of purchase, the book value and fair value;of Springmade's net assets were equal. Pexo purchased $2,890,000 of materials;from Springmade in 2014 alone. All;intercompany sales are made at 120% of cost, although Springmade is able to;mark up their products 80% to other outside buyers. Pexo carried inventory on;their books at the beginning and end of the year in the amount of $450,000 and;$480,000, respectively, all of which had been purchased from Springmade. Income;statement information for both companies for 2014 is as follows;Pexo Springmade;Sales;Revenue $3,793,000;$4,441,000;Investment;income from Springmade 245,000;Cost;of Goods Sold (3,139,000) (3,270,000);Expenses (257,000) (921,000);Net Income $642,000;$250,000;REQUIRED:Prepare a consolidated income statement for;Pexo Corporation and Subsidiary for 2014.
Paper#42999 | Written in 18-Jul-2015Price : $22