Penny Ltd Sells Inventory Items to Its Subsidiary Bolt Ltd

question 6

Multiple Choice

Penny Ltd sells inventory items to its subsidiary Bolt Ltd.If during the financial year 2013,the unrealised profits in ending inventory in Stitch Ltd is less than its unrealised profits in beginning inventory,which of the following statements is correct with respect Penny Ltd's consolidated financial statements after considering these transactions only?

• A) Consolidated profit will increase;
• B) Consolidated deferred tax liability will increase;
• C) Consolidated ending inventory will decrease;
• D) Consolidated sales will be unaffected;
• E) None of the given answers.

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