Jolly Company owns 60 percent of the outstanding shares of Sad. During the curre

Question

Jolly Company owns 60 percent of the outstanding shares of Sad. During the current year, Jolly sold inventory costing $90,000 to Sad for $100,000. Sad has already transferred cash in full payment. Sad still holds all of this inventory on the last day of the year. At the balance sheet date, Jolly has total current assets of S700,000 whereas Sad has total current assets of $400,000. Assume that there were no allocations established at the date of acquisition. What is the total amount reported on the consolidated balance sheet for current assets? Question 13 options A) $1,000,000 B) $1,000,000 C) $1,094,000 D) $1,100,000

Explanation / Answer

B.$1,090,000.

jolly current assets $700,000 sad current assets $400,000 less: elimination of profit on unsold intercompany stock ($100,000-90,000) ($10,000) current assets reported in balance sheet $1,090,000

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