|Posted: 04 Feb 2011 at 07:31 | IP Logged
The way I understand the question is that the "Inventory from Lamm" is the inventory left after Banks sold the inventory received from Lamm.
Since intercompany sales and unrealized profits are eliminated in the consolidated F/S, you have to take out the unrealized profits from the 60,000 inventory. As depressed explained, the unrealized profit of the 60,000 inventory would be 60,000/200,000 x 50,000 = 15,000. Therefore total inventory would be
175,000 + 250,000 + 60,000 - 15,000 = 470,000
It took me a while to understand the question. Hoping something ambiguous as this doesn't appear in the test.
Wish me luck.