The trial balances of Ash Inc. and its subsidiary Cinder Corp. on December 31, 2020 are shown below: Ash Cinder Inventory $ 160 , 000 $ 100 , 000 Plant and Equipment (net) $ 2 , 700 , 000 $ 700 , 000 Dividends Declared $ 200 , 000 $ 100 , 000 Investment in Cinder $ 700 , 000 Cost of Goods Sold $ 650 , 000 $ 90 , 000 Other Expenses $ 50 , 000 $ 10 , 000 Total Assets $ 4 , 460 , 000 $ 1 , 000 , 000 Liabilities $ 1 , 000 , 000 $ 150 , 000 Common Shares $ 1 , 660 , 000 $ 600 , 000 Retained Earnings $ 600 , 000 $ 100 , 000 Sales and Other Revenue $ 1 , 200 , 000 $ 150 , 000 Total Liabilities and Equity $ 4 , 460 , 000 $ 1 , 000 , 000 \begin{array}{|l|r|r|}\hline & ext { Ash } & ext { Cinder } \\hline ext { Inventory } & \$ 160,000 & \$ 100,000 \\hline ext { Plant and Equipment (net) } & \$ 2,700,000 & \$ 700,000 \\hline ext { Dividends Declared } & \$ 200,000 & \$ 100,000 \\hline ext { Investment in Cinder } & \$ 700,000 & \\hline ext { Cost of Goods Sold } & \$ 650,000 & \$ 90,000 \\hline ext { Other Expenses } & \$ 50,000 & \$ 10,000 \\hline ext { Total Assets } & \$ 4,460,000 & \$ 1,000,000 \\hline ext { Liabilities } & \$ 1,000,000 & \$ 150,000 \\hline ext { Common Shares } & \$ 1,660,000 & \$ 600,000 \\hline ext { Retained Earnings } & \$ 600,000 & \$ 100,000 \\hline ext { Sales and Other Revenue } & \$ 1,200,000 & \$ 150,000 \\hline ext { Total Liabilities and Equity } & \$ 4,460,000 & \$ 1,000,000\\hline\end{array} Inventory Plant and Equipment (net) Dividends Declared Investment in Cinder Cost of Goods Sold Other Expenses Total Assets Liabilities Common Shares Retained Earnings Sales and Other Revenue Total Liabilities and Equity Ash $160 , 000 $2 , 700 , 000 $200 , 000 $700 , 000 $650 , 000 $50 , 000 $4 , 460 , 000 $1 , 000 , 000 $1 , 660 , 000 $600 , 000 $1 , 200 , 000 $4 , 460 , 000 Cinder $100 , 000 $700 , 000 $100 , 000 $90 , 000 $10 , 000 $1 , 000 , 000 $150 , 000 $600 , 000 $100 , 000 $150 , 000 $1 , 000 , 000 Other Information:Ash acquired Cinder in three stages: january 1, 2017: Ash purchased 10,000 shares for $ 100 , 000 . Cinder’s Retained Earnings were $ 40 , 000 on that date. The investment is classified as fair value through profit or loss (FVTPL). january 1, 2019: Ash purchased 30,000 shares for $ 450 , 000 . Cinder’s Retained Earnings were $ 80 , 000 on that date. Ash has obtained significant influence in the key decisions for Cinder. December 31,2020: Ash purchased 20,000 shares for $ 150 , 000 . Cinder’s Retained Earnings were $ 100 , 000 on that date. Ash now owns 60 % and has control over Cinder. \begin{array} { |l|l| }\hline ext { january 1, 2017:} & \begin{array} { l } ext { Ash purchased 10,000 shares for \$ 100,000 . Cinder ' s } \ ext { Retained Earnings were \$ 40,000 on that date. The } \ ext {investment is classified as fair value through profit or loss } \ ext {(FVTPL). } \\end{array}\\hline ext {january 1, 2019: } & \begin{array} { l } ext { Ash purchased 30,000 shares for \$ 450,000 . Cinder ' s } \ ext {Retained Earnings were \$ 80,000 on that date. Ash } \ ext {has obtained significant influence in the key decisions for } \ ext {Cinder. } \\end{array}\\hline ext {December 31,2020: } & \begin{array} { l } ext {Ash purchased 20,000 shares for \$ 150,000 . Cinder ' s } \ ext { Retained Earnings were \$ 100,000 on that date. Ash } \ ext { now owns 60 \% and has control over Cinder.} \\end{array}\\hline \end{array} january 1, 2017: january 1, 2019: December 31,2020: Ash purchased 10,000 shares for $100 , 000. Cinder’s Retained Earnings were $40 , 000 on that date. The investment is classified as fair value through profit or loss (FVTPL). Ash purchased 30,000 shares for $450 , 000. Cinder’s Retained Earnings were $80 , 000 on that date. Ash has obtained significant influence in the key decisions for Cinder. Ash purchased 20,000 shares for $150 , 000. Cinder’s Retained Earnings were $100 , 000 on that date. Ash now owns 60% and has control over Cinder. Cinder was incorporated on January 1, 2015. On that date, Cinder issued 100,000 voting shares.Any difference between the cost and book value is attributable entirely to trademarks, which are to be amortized over 5 years. The company has neither issued nor retired shares since the date of its incorporation.Ash sold depreciable assets to Cinder at a loss of $20,000 on January 1, 2019. These assets had a 10 year remaining life.Intercompany sales of inventory during 2020 amounted to $250,000. Unrealized inventory profits for each company are shown below for 2020. The amounts indicate the amount of profit in each company's inventory. Ash January 1 , 2020 : $ 10 , 000 December 31 , 2020 : $ 20 , 000 Cinder January 1 , 2020 : $ 20 , 000 December 31 , 2020 : $ 40 , 000 \begin{array}{|c|c|}\hline ext { Ash } & \\hline ext { January } 1,2020: & \$ 10,000 \\hline ext { December } 31,2020: & \$ 20,000 \\hline ext { Cinder } & \\hline ext { January } 1,2020: & \$ 20,000 \\hline ext { December } 31,2020: & \$ 40,000 \\hline\end{array} Ash January 1 , 2020 : December 31 , 2020 : Cinder January 1 , 2020 : December 31 , 2020 : $10 , 000 $20 , 000 $20 , 000 $40 , 000 All inventories on hand at the start of 2020 were sold to outsiders during the year. The net incomes of both companies are evenly earned throughout the year. Both companies are subject to an effective corporate tax rate of 20%.Compute consolidated inventory for Ash as at December 31, 2020.

Question

The trial balances of Ash Inc. and its subsidiary Cinder Corp. on December 31, 2020 are shown below:  Ash   Cinder   Inventory  $ 160 , 000 $ 100 , 000  Plant and Equipment (net)  $ 2 , 700 , 000 $ 700 , 000  Dividends Declared  $ 200 , 000 $ 100 , 000  Investment in Cinder  $ 700 , 000  Cost of Goods Sold  $ 650 , 000 $ 90 , 000  Other Expenses  $ 50 , 000 $ 10 , 000  Total Assets  $ 4 , 460 , 000 $ 1 , 000 , 000  Liabilities  $ 1 , 000 , 000 $ 150 , 000  Common Shares  $ 1 , 660 , 000 $ 600 , 000  Retained Earnings  $ 600 , 000 $ 100 , 000  Sales and Other Revenue  $ 1 , 200 , 000 $ 150 , 000  Total Liabilities and Equity  $ 4 , 460 , 000 $ 1 , 000 , 000 \begin{array}{|l|r|r|}\hline  &  	ext { Ash }  &  	ext { Cinder } \\hline 	ext { Inventory }  &  \$ 160,000  &  \$ 100,000 \\hline 	ext { Plant and Equipment (net) }  &  \$ 2,700,000  &  \$ 700,000 \\hline 	ext { Dividends Declared }  &  \$ 200,000  &  \$ 100,000 \\hline 	ext { Investment in Cinder }  &  \$ 700,000  &  \\hline 	ext { Cost of Goods Sold }  &  \$ 650,000  &  \$ 90,000 \\hline 	ext { Other Expenses }  &  \$ 50,000  &  \$ 10,000 \\hline 	ext { Total Assets }  &  \$ 4,460,000  &  \$ 1,000,000 \\hline 	ext { Liabilities }  &  \$ 1,000,000  &  \$ 150,000 \\hline 	ext { Common Shares }  &  \$ 1,660,000  &  \$ 600,000 \\hline 	ext { Retained Earnings }  &  \$ 600,000  &  \$ 100,000 \\hline 	ext { Sales and Other Revenue }  &  \$ 1,200,000  &  \$ 150,000 \\hline 	ext { Total Liabilities and Equity }  &  \$ 4,460,000  &  \$ 1,000,000\\hline\end{array}  Inventory   Plant and Equipment (net)   Dividends Declared   Investment in Cinder   Cost of Goods Sold   Other Expenses   Total Assets   Liabilities   Common Shares   Retained Earnings   Sales and Other Revenue   Total Liabilities and Equity  ​  Ash  $160 , 000 $2 , 700 , 000 $200 , 000 $700 , 000 $650 , 000 $50 , 000 $4 , 460 , 000 $1 , 000 , 000 $1 , 660 , 000 $600 , 000 $1 , 200 , 000 $4 , 460 , 000 ​  Cinder  $100 , 000 $700 , 000 $100 , 000 $90 , 000 $10 , 000 $1 , 000 , 000 $150 , 000 $600 , 000 $100 , 000 $150 , 000 $1 , 000 , 000 ​ ​   Other Information:Ash acquired Cinder in three stages:  january 1, 2017:  Ash purchased 10,000 shares for  $ 100 , 000 . Cinder’s   Retained Earnings were  $ 40 , 000  on that date. The  investment is classified as fair value through profit or loss  (FVTPL).  january 1, 2019:   Ash purchased 30,000 shares for  $ 450 , 000 . Cinder’s  Retained Earnings were  $ 80 , 000  on that date. Ash  has obtained significant influence in the key decisions for  Cinder.  December 31,2020:  Ash purchased 20,000 shares for  $ 150 , 000 . Cinder’s   Retained Earnings were  $ 100 , 000  on that date. Ash   now owns  60 %  and has control over Cinder. \begin{array} { |l|l|  }\hline  	ext { january 1, 2017:} &  \begin{array} { l  } 	ext { Ash purchased 10,000 shares for   \$ 100,000  . Cinder ' s } \ 	ext { Retained Earnings were   \$ 40,000   on that date. The } \ 	ext {investment is classified as fair value through profit or loss  } \ 	ext {(FVTPL). } \\end{array}\\hline  	ext {january 1, 2019: }  & \begin{array} { l  } 	ext { Ash purchased 30,000 shares for   \$ 450,000  . Cinder ' s } \ 	ext {Retained Earnings were   \$ 80,000   on that date. Ash  } \ 	ext {has obtained significant influence in the key decisions for } \ 	ext {Cinder. } \\end{array}\\hline  	ext {December 31,2020: }  & \begin{array} { l  } 	ext {Ash purchased 20,000 shares for   \$ 150,000  . Cinder ' s  } \ 	ext { Retained Earnings were   \$ 100,000   on that date. Ash } \ 	ext { now owns   60 \%   and has control over Cinder.} \\end{array}\\hline \end{array}  january 1, 2017: january 1, 2019:  December 31,2020:  ​  Ash purchased 10,000 shares for $100 , 000. Cinder’s   Retained Earnings were $40 , 000 on that date. The  investment is classified as fair value through profit or loss  (FVTPL).  ​  Ash purchased 30,000 shares for $450 , 000. Cinder’s  Retained Earnings were $80 , 000 on that date. Ash  has obtained significant influence in the key decisions for  Cinder.  ​ Ash purchased 20,000 shares for $150 , 000. Cinder’s   Retained Earnings were $100 , 000 on that date. Ash   now owns 60% and has control over Cinder. ​ ​ ​ Cinder was incorporated on January 1, 2015. On that date, Cinder issued 100,000 voting shares.Any difference between the cost and book value is attributable entirely to trademarks, which are to be amortized over 5 years. The company has neither issued nor retired shares since the date of its incorporation.Ash sold depreciable assets to Cinder at a loss of $20,000 on January 1, 2019. These assets had a 10 year remaining life.Intercompany sales of inventory during 2020 amounted to $250,000. Unrealized inventory profits for each company are shown below for 2020. The amounts indicate the amount of profit in each company's inventory.  Ash   January  1 , 2020 : $ 10 , 000  December  31 , 2020 : $ 20 , 000  Cinder   January  1 , 2020 : $ 20 , 000  December  31 , 2020 : $ 40 , 000 \begin{array}{|c|c|}\hline 	ext { Ash }  &  \\hline 	ext { January } 1,2020:  &  \$ 10,000 \\hline 	ext { December } 31,2020:  &  \$ 20,000 \\hline 	ext { Cinder }  &  \\hline 	ext { January } 1,2020:  &  \$ 20,000 \\hline 	ext { December } 31,2020:  &  \$ 40,000 \\hline\end{array}  Ash   January  1 , 2020 :  December  31 , 2020 :  Cinder   January  1 , 2020 :  December  31 , 2020 : ​ $10 , 000 $20 , 000 $20 , 000 $40 , 000 ​ ​   All inventories on hand at the start of 2020 were sold to outsiders during the year. The net incomes of both companies are evenly earned throughout the year. Both companies are subject to an effective corporate tax rate of 20%.Compute consolidated inventory for Ash as at December 31, 2020.

shantay white · Accepted Answer

Final Answer :   Book value of inventory  $ 260 , 000  less:   Unrealized Profits  ( $ 20 , 000 + $ 40 , 000 ) ( $ 60 , 000 ) $ 200 , 000 \begin{array} { | l | c | } \hline 	ext { Book value of inventory }  &  \$ 260,000 \\hline 	ext { less: }  &  \\hline 	ext { Unrealized Profits } ( \$ 20,000 + \$ 40,000 )  &  (\$ 60,000 ) \\hline  &  \$ 200,000 \\hline\end{array}  Book value of inventory   less:   Unrealized Profits  ( $20 , 000 + $40 , 000 ) ​ $260 , 000 ( $60 , 000 ) $200 , 000 ​ ​

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