Akron, Inc., owns all outstanding stock of Toledo Corporation. Amortization expense of $15,000 per..

Akron, Inc., owns all outstanding stock of Toledo Corporation. Amortization expense of $15,000 per year for patented technology resulted from the original acquisition. For 2011, the companies had the following account balances: Akron Toledo Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,100,000 $600,000 Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 400,000 Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 220,000 Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . Not
»  Akron, Inc., owns all outstanding stock of Toledo Corporation. Amortization expense of $15,000 per year for patented technology resulted from the original acquisition. For 2011, the companies had the following account balances: Akron Toledo Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,100,000 $600,000 Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 400,000 Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 220,000 Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . Not given –0– Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 30,000 Intra-entity sales of $320,000 occurred during 2010 and again in 2011. This merchandise cost $240,000 each year. Of the total transfers, $70,000 was still held on December 31, 2010, with $50,000 unsold on December 31, 2011. a. For consolidation purposes, does the direction of the transfers (upstream or downstream) affect the balances to be reported here? b. Prepare a consolidated income statement for the year ending December 31, 2011.

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