Where an Investor Sells Inventories to an Associate and the Inventories

question 27

Multiple Choice

Where an investor sells inventories to an associate and the inventories are still on hand at the end of the year, the investor's share of the associate's profit is:

• A) not affected as unrealised profits are only considered to arise in a parent-subsidiary relationship.
• B) not affected as the unrealised profit is in the books of the investor, not the associate.
• C) increased by the investor's share of the unrealised profit.
• D) decreased by the investor's share of the unrealised profit.