Assume that a wholly owned subsidiary sells inventory to the parent company. The parent company, ultimately, sells the inventory to customers outside of the consolidated group. The parent company compiled the following data for the years ending 2018 and 2019: Subsidiary Net Income Intercompany Inventory Sales Gross Profit % % Inventory Remaining at End of Year Receivable (Payable)
2019 $600,000 $80,000 35% 15% $30,000
2018 $500,000 $60,000 30% 12% $25,000
Assume that inventory not remaining at the end of the year was sold outside of the consolidated group during the year.
Assume the parent company uses the equity method to account for its subsidiary. The subsidiary paid $450,000 in dividends during 2019.
Required:
a. How much Equity Income should the parent report in its pre-consolidation income statement for the year ending 2019, assuming that it uses the equity method of accounting for its Equity Investment?
b. Prepare the required consolidation journal entries for 2019.

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Suppose that fizzo and pop hop are the only two firms that sell orange soda. the following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: pop hopadvertise doesn’t advertisefizzo advertise 10, 10 18, 2doesn’t advertise 2, 18 11, 11for example, the upper right cell shows that if fizzo advertises and pop hop doesn't advertise, fizzo will make a profit of $18 million, and pop hop will make a profit of $2 million. assume this is a simultaneous game and that fizzo and pop hop are both profit-maximizing firms.if fizzo decides to advertise, it will earn a profit if pop hop advertises and a profit if pop hop does not advertise.if fizzo decides not to advertise, it will earn a profit if pop hop advertises and a profit if pop hop does not advertise.if pop hop advertises, fizzo makes a higher profit if it chooses (not to advertise, to .if pop hop doesn't advertise, fizzo makes a higher profit if it chooses (not to advertise, to . suppose that both firms start off not advertising. if the firms act independently, what strategies will they end up choosing? fizzo will choose to advertise and pop hop will choose not to advertise.both firms will choose to advertise.fizzo will choose not to advertise and pop hop will choose to advertise.both firms will choose not to advertise.again, suppose that both firms start off not advertising. if the firms decide to collude, what strategies will they end up choosing? fizzo will choose not to advertise and pop hop will choose to advertise.both firms will choose not to advertise.fizzo will choose to advertise and pop hop will choose not to advertise.both firms will choose to advertise.