Inventory Transfer between Parent and Subsidiary
Karlow Corporation owns 60 percent of Draw Company’s voting shares. During 20X3, Karlow produced 25,000 computer desks at a cost of $82 each sold 10,000 desks to Draw for $94 each. Draw sold 7,000 of the desks to unaffiliated companies for $130 each prior to December 31, 20X3, and sold the remainder in early 20X4 for $140 each. Both companies use perpetual inventory systems.