Tara Company Holds 80 Percent of the Common Stock of Stodd

Essay

Tara Company holds 80 percent of the common stock of Stodd Inc.In the current year,Tara reports sales of $5,000,000 and cost of goods sold of $3,500,000.For the same period,Stodd has sales of $500,000 and cost of goods sold of $400,000.During the year,Stodd sold merchandise to Tara for $40,000 at a price based on the normal markup.At the end of the year,Tara still possesses 20 percent of this inventory.Prepare the consolidation entry to defer the unrealized gain.