A Parent Sold Some Inventories to Its Subsidiary for $55

question 18

Multiple Choice

A parent sold some inventories to its subsidiary for $55 000. The goods had originally cost the parent $40 000. At the end of the year all of the inventories were still on hand. The consolidation adjustment entry to eliminate this transaction will include the following line items?

• A) Cr Cost of sales $15 000
• B) Cr Cost of sales $40 000
• C) Cr Cost of sales $95 000
• D) Cr Cost of sales $55 000

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Definitions:

Total Assets

The aggregate of all assets owned by an entity, both current and non-current, as recorded in the financial statements.

Accounts Receivable

Amounts owed to a business for services performed or goods delivered.

Percentage Increase

A measure of how much a certain quantity grows over a specific period, expressed as a percentage of the original amount.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.