Question

During 20X0, Pard Corp. sold goods to its 80%-owned subsidiary, Seed Corp. At December 31, 20X0, one-half of these good were included in Seed's ending inventory. Reported 20X0 selling expenses were $1,100,000 and $400,000 for Pard and Seed, respectively. Pard's selling expenses included $50,000 in freight-out costs for goods sold to Seed. What amount of selling expenses should be reported in Pard's 20X0 consolidated income statement?

Answer 1

The amount to be repot is $1,450,000

Step-by-step explanation:

in this question, we are asked to calculate the amount of selling expenses to be recorded in the company’s consolidated income statement for that year.

To answer this question, we employ a mathematical approach;

Mathematically;

Selling expenses = Total expenses - Contra Expenses

from the question, we identify that total expenses is (1,100,000 + 400,000) = $1,500,000

Contra expenses = $50,000

The selling expenses is thus; 1,500,000 - 50,000 = $1,450,000