What is the consolidated sales revenue for the year ended

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Reference no: EM132706317

Question - On January 1, 2020, Entity 1 acquired 60% of the outstanding ordinary shares of Entity B at a gain on bargain purchase of P40,000. For the year ended December 31, 2021, Entity A and Entity B reported sales revenue of P2,0000,000 and P1,000,000 in their respective separate income statements.

During 2020, Entity A sold inventory to Entity B at a selling price of P280,000 with gross profit rate of 40% based on cost. On the other hand, Entity B sold inventory to Entity A at a selling price of P400,000 with gross profit rate of 30% based on sales during 2021.

On December 31, 2020, 25% of the goods coming from Entity A remained in Entity B's inventory but all were eventually sold to third persons during 2021. As of December 31, 2021, 40% of the goods coming from Entity B were eventually sold to third persons.

For the year ended December 31, 2021, Entity A reported net income of P500,000 while Entity B reported net income of P200,000 and distributed dividends of P50,000. Entity A accounted for its inventory in Entity B using cost method in its separate financial statements.

What is the consolidated sales revenue for the year ended December 31, 2021?

a. 2,600,000

b. 2,320,000

c. 3,000,000

d. 2,720,000

Reference no: EM132706317

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