Earth co owns 100 percent of the capital stock of both mars co and venus co. Mar

Question

Earth co owns 100 percent of the capital stock of both mars co and venus co. Mars purchases merchandise inventory from venus cost During 2018 venus sold inventory to mars that it had purchased for 25,000 mars sold all of this merchandise to unrealated customer for 56892 during 2018. In preparing combined financial statements for 2018. Earths bookkeeper disregarded the common ownership of mars and venus. Based information what amount should be eliminated from cost of goods sold in the combined income statement for 2018?

Explanation / Answer

Since all the intercompany inventory has been sold to outsiders and hence there is no unrealised profit or loss and hence nothing is to be eliminated or no adjustment needs to be done.

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