Question

On January 1, 2018, Pride, Inc. acquired 80% of the outstanding voting common stock of Strong Corp. for $364,000. There is no active market for Stong's stock. Of this payment, $28,000 was allocated to equipment (with a five-year life) that had been undervalued on Stones books by $35,000. Any remaining excess was attributable to goodwill, which has not been impaired. As of December 31, 2018, before preparing the consolidated worksheet, the financial statements appeared as follows:

		Pride Inc	Strong Corp
Revenues	$	420,000	280,000
Cost Of Goods Sold		(196,000)	(112,000)
Operating expenses		(28,000)	(14,000)
Net income	$	196,000	154,000
Retained earnings 1/1/18		420,000	210,000
Net income(above)		196,000	154,000
Dividends paid		0	0
Retained earnings 12/31/18	$	616,000	364,000
Cash and receivables		294,000	126,000
Inventory		210,000	154,000
Investment in Strong Corp		364,000	0
Equipment(net)		616,000	420,000
Total Assets	$	1,484,000	700,000
Liabilities		588,000	196,000
Common stock		280,000	140,000
Retained earnings 12/31/18 above		616,000	364,000
Total liabilities and stckholder's equity	$	1,484,000	700,000

During 2018, Pride bought inventory for $112,000 and sold it to Strong for $ 140,000. Only half of the inventory purchase price had been remitted to Pride by Strong at year-end. As of December 31, 2018, 60% of these goods remained in the company's possession.

What is the total of consolidated revenues?

	A.	$700,000
	B.	$560,000
	C.	$588,000
	D.	$644,000
	E.	$840,000

Answer 1

Answer: Option B $560,000

Parent’s Revenue	420,000
Subsidiary’s Revenue	280,000
Less: Intra-Entity Transfers	(140,000)
Total of consolidated revenue	560,000